The Godfather: Paulson Makes Offer Banks Can't Refuse
Posted Oct 15, 2008 by Aaron Task
The day after the news about a watershed change in American capitalism, the story behind the story of how Hank Paulson forced the nations top 9 banks to take capital is coming to light.
After a discussion of the state of the banking system and U.S. economy, the bankers were then unceremoniously handed a one-page term sheet outlining Paulson's plan. The bank CEOs "weren't allowed to negotiate," The WSJ reports. "Paulson requested that each of them sign. It was for their own good and the good of the country, he said, according to a person in the room."
In sum, Hank Paulson made the bank CEOs an offer they couldn't refuse -- like a present-day (and real) Don Corleone.
Some of the other anecdotes that emerged, according to both the WSJ and NY Times:
Wells Fargo CEO Richard Kovacevich was the most vocal in opposing the deal, but he too ultimately relented. (This morning, Wells Fargo shares were rallying after it reported better-than-expected third-quarter results, although its revenue fell shy of expectations.)
*
President Bush pledges to continue work to stabilize banking industry, US to buy bank shares
WASHINGTON (AP) -- President Bush on Tuesday announced a $250 billion plan by the government to directly buy shares in the nation's leading banks, saying the drastic steps were "not intended to take over the free market but to preserve it."
Nine major banks will participate initially including all of the country's largest institutions.
Some of the big banks had to be pressured to participate in the program by Treasury Secretary Henry Paulson, who wanted healthy institutions that did not necessarily need capital from the government to go first as a way of removing any stigma that might be associated with banks getting bailouts.
Bush, in brief remarks in the Rose Garden of the White House, said the government will initially buy stocks in nine major U.S. banks.
"These efforts are designed to directly benefit the American people by stabilizing the financial system and helping the economy recover," he said.
Paulson, at a news conference a short time later, said "today's actions are what we must do to restore confidence in our financial system."
"We regret having to take these actions," said Paulson. "Today's actions are not what we ever wanted to do -- but today's actions are what we must do to restore confidence to our financial system."
"The needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it," Paulson said, meaning that they will use the money to bolster lending to each other and to their customers.
"Government owning a stake in any private U.S. company is objectionable to most Americans -- me included," Paulson added. "Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable."
*
By Jeannine Aversa, AP Economics Writer
Government moves into banking -- to the tune of $250 billion -- as the bailout becomes a buy-in
WASHINGTON (AP) -- Big banks started falling in line Tuesday behind a rejiggered bailout plan that will have the government forking over as much as $250 billion in exchange for partial ownership -- putting the world's bastion of capitalism and free markets squarely in the banking business.
*
I'm a die-hard Capitalist - for some familiar reasons, and for some that are not necessarily traditional.
What sets apart America from the rest of the world under the Constitution, is all the freedoms we have taken for granted. One of those freedoms is - Freedom. Government was designed to insure us unfettered freedom to do what we please under the law. No government intervention in our private lives, no state religion, the right to bear arms for self-preservation, and the right for the talented and ambitious to achieve what in most of the world is unfathomable.....
We can - if we choose - to work hard, and with fierce determination to succeed, achieve great wealth; and voluntarily use that wealth to enrich ourselves with expensive toys, or to be able help others that are less fortunate (or both). Or we can choose a life of nothingness - where all our existence is spent on frivolity and personal creature comforts.
Public assistance is actually a concept that the world inherited from the Torah - designed for the people that truly can not manage on their own. The laws of tithing, shmitta, pruzbul, yovel, ir hanidachat, m'lava es hamet (gemillat chesed)...are all Torah concepts.
What we do know is that the human animal needs independence to thrive; to think freely, to dream, to learn truths, to make mistakes, to fail, to learn from those mistakes and become all the better for it.
Look around the globe! Socialism and Communism are abject failures. Look at Sweden, the Netherlands, France, Canada, Russia (of course)...There are no incentives for the plain-folk to achieve. Medical care is Third World voodoo medicine-man-like. The wealthy come to the U.S., in most cases, for major health care issues.
If history has taught us anything, it is that empires last no more than two hundred years. Of course - that could be different here in the U.S. - if we take steps to learn from history. What causes collapse? How can humans be taught to see the big picture? How do we teach people that life is a chess game - if you can't see five moves ahead - you lose to the person who can.
Although I've been a life-long Republican and voted for Bush (actually Cheney)...he will go down as probably the most inept president ever --- he beats Carter badly - and I thought nobody could beat Carter.
Now he's turning over the executive branch of government - in all likelihood - to a group of people that will "be fair with your money and spread the wealth around" to people who, in most cases chose victimhood, rather than freedom. Yes, there are plenty of people that need public assistance - but most do not!
When government gets to choose what group of people they raise taxes on - or what health care company you will have - or what schools your kids should go to --- how far away is - telling you what house of worship you should frequent --- or none at all!
The reason the U.S.A. flourished in the past two hundred years - more than the entire 5500 years of civilization prior, according to the Jewish calendar - because people were free to pick and choose within the law what was good for them in every sphere of humanity. The one basic reason the USA led the way in just about every field of science and medicine - is because of freedom of religion or non-religion. No scientist, writer, or thinker, had to be concerned they would be incarcerated for views that opposed the church of Religion or the temple of Socialism.
Hank Paulson is a fraud! The entire bailout of the financial institutions, was designed to protect the thieves that concocted this Ponzi scheme, Paulson as former CEO of Goldman Sachs included.
There are already heads of state that are grumbling about the Jews on Wall Street. There is no doubt that the manipulation and machinations of the financial markets over the last decade, included firms with Jewish sounding names.
Should the Jews be concerned?
In 2003 I was invited to debate Daniel Lapin, - right after his book "America's Real War" was published. The thrust of his book - "that a Holocaust-type event can never happen in America", grated on me and was historically flat wrong. We need not look back too far to understand that in times of massive economic downturns, a scapegoat is needed and always selected, and it is always the Jews.
With names like, Greenspan, Bernanke, Robert Rubin, Bloomberg, Goldman, Sachs, Soros, Lehman, Greenberg (AIG) bandied around daily about the globe as villains (some are, and there are others yet to be exposed) --- we must not be complacent about our future!
At this writing, the possibility of an Obama presidency is almost a given. I care not about the color of his skin. I'm worried sick about his radical affiliations, socialist past and ideology, and the team of Lefties that will certainly accompany him to the White House.
What to do?
For the time-being, I am left without answers! But please Jewish-American citizens around the globe, kindly cast your vote in person or by mail-in ballot!
The America we know and love will undoubtedly change for the worse - if the Democrat party were to occupy the White House come January 20, 2009!
UOJ