I don’t know what it is about Dennis Kucinich. I just couldn’t “get” him. Clearly he marches to the beat of that different drum. He’s the guy I would expect to see in the desert at Burning Man, not in the Capitol. He’s the guy I could picture getting persecuted by the school bully. But in an age when it appears the primary function of Congress is to get reelected, Kucinich stands apart for all the right reasons.
Dennis Kucinich had pretty much faded out of my thinking until the Oversight Committee on Domestic Policy, which he chairs, began its inquiry into the Treasury Department’s shift from the plan it presented to Congress in order to secure passage of the Emergency Economic Stabilization Act of 2008. The bill rushed through Congress and placed nearly $1 trillion into the hands of the new Treasury Department Office of Financial Stability.
The original Treasury Department plan called for the purchase of mortgage-backed securities under auction protocols to be determined by the Office of Financial Stability. The plan called for the purchase of certain whole loans, an insurance program to cover troubled assets, programs to ensure that lending institutions, working with the Department of Housing and Urban Development, would work with homeowners to keep them in their homes. The securities and loans were to be sold back, providing a vehicle to return most of the allocated funds to the Treasury. Risk was somewhat mitigated by the value of the mortgage assets.
In a major change of direction, Secretary of the Treasury Paulson and President Bush announced that the Treasury will instead buy equity stakes in banks including Goldman Sachs Group, Inc, Morgan Stanley, J.P. Morgan Chase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Company, Bank of New York Mellon and State Street Corp and smaller banks. Treasury will spend none of the allocated funds as the original plan indicated.
There are concerns growing with each passing week about the bailout bill. High on the list is the lack of transparency about where the money’s going. The Treasury Department will issue no information until it actually releases funds to the recipients. The banks themselves are making the announcements.
Concern about how the funds are being used is growing as well. Recipients such as Wells Fargo are reportedly buying smaller or distressed banks, Wachovia in the Wells Fargo example. With credit the primary concern, banks benefiting from the bailout are raising interest rates. Another concern about the Troubled Assets Relief Program in general and its equity stakes purchase in particular is the question of oversight.
Assurances were made to Congress and the American People that the bailout would benefit Main Street, not Wall Street. The bill was to limit bonuses and prohibit golden parachutes to executives of companies holding TARP funds. Reportedly, banks designated to receive TARP subsidies have set aside over $108 billion to pay bonuses.
AIG, the insurance giant, set to accept $154 billion in bailout money reportedly has over $503 million allocated for bonuses.
Treasury Secretary Paulson, who served as Chairman and CEO of Goldman Sachs, named Neel Kashkari, formerly a Goldman Sachs Vice President as Interim Assistant Treasury Secretary for Financial Stability, responsible for running the Office of Financial Stability. Since Goldman Sachs is a major beneficiary of TARP, concern about conflict of interest is only natural. There is no provision in the bill for judiciary oversight of Paulson and the Treasury Department.
With $350 billion already spent and the economy spiraling downward, Interim Assistant Treasury Secretary Neel Kashkari was summoned to appear before Kucinich and the House Oversight Committee on Domestic Policy. Kashkari, who at the age of 35 has been given control of $700 billion of taxpayer money, got grilled from both sides of the aisle.
Republican Darrell Issa held Kashkari’s feet to the fire about the price point of the equity share purchases and chided Kashkari for avoiding answering his questions. Issa pointed out that private investors such as Warren Buffet won’t invest in these banks so long as the government is. Democrat Elijah Cummings asked Kashkari how he felt about AIG “giving $503 million in bonuses with one hand while accepting $154 billion from hard-working taxpayers.
Kucinich was the star. His performance as committee chair was exemplary. Kucinich, who had voted against the Emergency Economic Stabilization Act, interrogated Kashkari with the intelligence and skill of a star litigating attorney. He asked questions I want answered.
As Rep. Cummings concluded his questioning of Kashkari, he exhorted Kashkari to think of the pain out of work taxpayers are feeling and to bring that realization into his work. Kashkari’s response was met by Kucinich, giving perhaps the most seminal statement on the bailout heard yet in Congress.
Kashkari: “I don’t know how to work any harder than we’re already working and I take your feedback very seriously. That’s why we’re working as hard as we are in trying to accomplish and meet your expectations.”
Kucinich: “I don’t think anyone questions, Mr. Kashkari, that you’re working hard. (pause) Our question is: who are you working for.”
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