Union Leader Accuses Paulson of Gifting Bailout Money; Naomi Kline Cites “Frantic Looting” Of Public Wealth

Leo Gerard, President of the United Steelworkers, in a letter to Treasury Secretary Henry Paulson, condemns the waste and fraud presented in the recent $125 billion bailout of financial institutions. Gerard accuses Paulson of paying twice as much for the government’s investment than what was a fair price.

In his letter, Gerard makes a detailed comparison of what Warren Buffet received for his $5 billion investment in Goldman Sach’s to what The US Treasury received and shows that Paulson paid more than twice what should have been paid.

Gerard says, “You paid $125 billion for securities for which a disinterested party would have paid $62.5 billion. This means that you gifted the other $62.5 billion to the shareholders of these nine institutions. … This is no different than if you paid me $10,000 for a car for which no one else would pay more than $5,000. You bought it for $5,000 and gifted me the other $5,000. In my world such gifts are rarely offered to working people.”

Gerard says, “It has been reported in the media that these firms have no intention of using this money for its intended purpose.” He complains that,“$25 billion per year that the firms pay out in dividends to their shareholders” will continue.

Gerard says, “Secretary Paulson, out in the real economy, the unbridled pursuit of greed that you and your friends on Wall Street have celebrated as a national religion has taken a terrible toll on ordinary Americans. Jobs with stagnant real wages have now given way to massive lay-offs, home foreclosures and real suffering.

“Out in the real economy, we need to once and for all bury the philosophy that worships only business, free markets, deregulation and free trade, and replace it with an economic program that restores the balance of power between workers and business, rebuilds the middle class and curbs corporate excesses.”

Naomi Klein in a recent Nation article, “The Bailout: Bush’s Final Pillage,” accuses the “Bush gang” of conducting, “a final frantic looting of the public wealth before they hand over the keys to the safe.”

Klein writes, “When European colonialists realized that they had no choice but to hand over power to the indigenous citizens, they would often turn their attention to stripping the local treasury of its gold and grabbing valuable livestock. If they were really nasty, like the Portuguese in Mozambique in the mid-1970s, they poured concrete down the elevator shafts.

“The Bush gang prefers bureaucratic instruments: ‘distressed asset’ auctions and the ‘equity purchase program.’ But make no mistake: the goal is the same as it was for the defeated Portuguese–a final frantic looting of the public wealth before they hand over the keys to the safe.”

Klein says, “Whoever wins the election on November 4 will have enormous moral authority. It can be used to call for a freeze on the dispersal of bailout funds–not after the inauguration, but right away. All deals should be renegotiated immediately, this time with the public getting the guarantees.”