Transcript: Bernie Sanders: Wall Street Bailout. 23 September 2008
Senator Bernie Sanders voices his concerns and plans concerning the proposed $700 billion bailout of Wall Street. There's a petition on his site.
Thom Hartmann talks with Senator Bernie Sanders, 23 September 2008
[Thom Hartmann]: Bernie Sanders is with us. Senator Bernie Sanders, sanders.senate.gov his web site. And Bernie, in 1931 Herbert Hoover bailed out the banks, it didn't work, they went bankrupt the next year. In 1998 the Japanese bailed out their banks. It didn't work. What's going on in Washington DC, now?
[Senator Bernie Sanders]: Well, what's going on, which disturbs me very much, is that we are looking at a bailout of unbelievable proportions. It's $700 billion, it could be higher than that. It is an extraordinarily risky proposal. And this comes from an administration which up to a couple of months ago was so incompetent or dishonest, by the way, that they were telling us that the fundamentals of the economy are strong. And then suddenly, last week, they said, 'oh, we made a little bit of a mistake. It appears that we're in the midst or on the verge of a major financial breakdown.
Now, you've got a very complicated issue here. I voted, when I was in the House, against Gramm-Bliley-Leach's proposal which did away with the walls that were, that had been established in the Depression era to prevent another depression, and I voted against all of these deregulatory efforts which have allowed the concentration of ownership in industry after industry. But right now, to my mind, we are in the absurd position of seeing the middle class people whose standard of living has precipitously declined since Bush has been president because of his very reckless policies, having to bail out Wall Street where people made obscene amounts of money. And that, to me, just is absolutely unacceptable.
[Thom Hartmann]: Yeah.
[Senator Bernie Sanders]: So I think the very first thing that we have got to talk about, you can argue 'til the cows come home what we should be doing, honest people may disagree, how quickly you have to act, and by the way, I should tell you that this makes me, it just reminds me a little bit of the rush to give Bush the authority to go to war in Iraq. It reminds me a little bit about the Patriot Act. But be that as it may, let's take Paulson and Bernanke at their word and let's say that they do need $700 billion, then the very simple question is, who pays for that? Should every man, woman and child in this country, people who are struggling at $30-35,000 a year to pay $2,200 per person, a family of 4 almost $9,000? I don't think so.
I think you have a situation today where under Bush the wealthiest people have seen just a huge increase in their wealth and income. Thom, if you can believe it, ?
The top 400 individuals in this country since Bush has been president have seen a 670 billion - billion, billion - dollar increase in their wealth, and they think it is the middle class who should have to go forward on this bailout.
So, I think before we even get into all of the complicated details of what we have to do to reform the system - a stimulus package, all of the other aspects of what we must do, not moving rashly, and thinking this thing through - the first point that should be established is that it is not the middle class, who are already hurting, bailing out the wealthiest people who have never had it so good.
And we have, among other things, we have a petition on my web site sanders.senate.gov, we already have, we put it up yesterday, we have 6,300 signatures and I would like to be able give to Mr. Paulson and let him know that the American people, if he is so concerned about it. He himself, by the way, you should know, in his last year I believe at Goldman Sachs received a $38 million bonus, in 2005.
[Thom Hartmann]: He walked away from Goldman with $700 million in Goldman stock, and because of a provision in the IRS code that was put in there by Bush senior, so that, for his buddies, he was able because section 1043 of the Internal Revenue code says if you are in the Executive Branch and you have to sell stock in your company to defer, to avoid conflict of interest rules, you defer paying capital gains. So he sold $700 million that had a basis of around $200 million. He had almost a $400 million capital gain that he never paid tax on.
[Senator Bernie Sanders]: I mean, it is just incredible. And it's not just Paulson, it's not just Bernanke, it's a whole host of these guys who acted in the most greedy way possible and they wrecked the economy and now, because of their greed and their avarice, it is the middle class who are supposed to step up to the plate.
[Thom Hartmann]: Bernie, what are the Democrats, what are the politics of this, Democrats and Republicans?
[Senator Bernie Sanders]: Well, here's what one of my concerns is: you know, in, I remember, you know, like it was yesterday, I'm kind of talking personally here, I remember when I was in the House, that there was a lot of discussion against, about the war in Iraq. And I remember Dick Gephardt, who was a friend of mine, just working with the president in the effort to move us toward that war.
And I just sensed that it was such a serious mistake at that time. What I just don't want to see, this is the political scenario that I fear very much.
What I fear is that you're going to have a Nancy Pelosi / Harry Reid / George Bush bailout of Wall Street. You're going to have Mr. McCain saying "Oh, not me, not me, I'm not going to bail out these reckless Wall Street traders, not me". And the Democrats are going to be locked in with George Bush, taking the heat for this, and the Republicans are going to laugh all the way to election day. That's my nightmare scenario.
[Thom Hartmann]: This is the October surprise.
[Senator Bernie Sanders]: This could be the October Surprise. So the Democrats are worried that on the one hand if they don't act they will be punished by Wall Street with declining markets and other economic problems, but if they do act, they're going to be lumped with Bush, and McCain and Karl Rove are going to laugh all the way to election day.
Now what is the answer? I mean, for a simple answer to my mind, would simply be to put an amendment which I am going to try my hardest to get onto the floor when this thing arrives to say, 'fine, Mr. Paulson, you want this $700 billion, hat's good. Here's an amendment which says your friends are going to pay for this, not my constituents'. And if the Republicans vote against it, well, that tells us that they want the middle class to pay for it. I think that's one way to clear the air.
[Thom Hartmann]: But in a way, that's sort of like the Democrats making the statements that they made with the FISA bill, you know, where they tried to water it down, they tried to dilute it, but, you know, it was, they were feeble efforts, and they were not remembered, frankly.
[Senator Bernie Sanders]: Right. Well, I think the point being that nobody who is not in the top one percent should be paying for this bailout will be remembered. That's a pretty clear statement.
[Thom Hartmann]: Yeah.
[Senator Bernie Sanders]: So that's what I hope will happen.
[Thom Hartmann]: So people should go over to sanders.senate.gov and sign your petition.
[Senator Bernie Sanders]: So what we are talking about, let me just review some of the proposals and...
[Thom Hartmann]: Bernie, apparently we've crashed your web site. The folks in our chat room say that they can't get on there.
[Senator Bernie Sanders]: Oh, Jesus.
[Thom Hartmann]: It might just be that so many people are trying to get in there.
[Senator Bernie Sanders]: Yeah, that could be. But I want to review just 4 proposals that we think should take place right now. Number one, most importantly, it should not be the middle class who are paying for this. We are proposing a surtax on people who are couples who make at least a million dollars a year, ten percents surtax on their income, and that would probably cover almost all the money that you would need, because they don't need $700 billion all at once. It would bring in about $300 billion dollars.
So this would be among the top three tenths, four tenths of one per cent.
Number two, we want to ensure that assets purchased from banks, this is very important, are realistically discounted so companies are not rewarded for their risky behavior and we want to require that taxpayers receive equity stakes in the bailed out companies.
So that's terribly important. Also, obviously, in the midst of all this we have to understand why we got into it. As I said earlier, in 1999 I voted against Gramm Bliley Leach, Gramm Leach Bliley, which deregulated financial services. We've got to bring back sensible regulation. Thom, you may have noticed yesterday that oil went off the wall.
[Thom Hartmann]: Yeah.
[Senator Bernie Sanders]: And anybody, I think that yesterday's activity in terms of oil should put an end to any of the debate about whether speculation is a significant factor in...
[Thom Hartmann]: Well, it didn't go up when the hurricane happened.
[Senator Bernie Sanders]: That's right. Here's the point. What does yesterday's huge increase in oil prices have to do with supply and demand?
[Thom Hartmann]: Yeah, nothing. It has to do with money moving around.
[Senator Bernie Sanders]: Exactly. That's correct. And the other point that very few people are talking about is this whole concept, we are where we are today because of the too big to fail doctrine. It seems to me, if an institution is to big to fail, it is too big to exist. And what we have got to do, whether it's the Sherman Anti-Trust or whatever, we have got to say that it makes no economic sense for the entire economy to be dependent upon maintaining these huge, huge, huge institutions which, if they fail, taxpayers are going to have to pick up the cost. So let's start breaking them up right now. It's ironic that in the midst of this crisis, Bank of America incorporates Countrywide and Merrill Lynch. Well, you know what, if next year Bank of America is going under, they're going to have to be bailed out, because they are also very much too big to fail.
So there's a lot that has to be done. But I think he major argument that should be made now in the midst of all of the analysis that's taking place, all of the ideas that people have as to how we can improve the economy, the central point right now is that Bush and his friends think they need $700 billion, fine, go to their wealthy friends who have made out like bandits because of their reckless policies and get the money from them, not from the middle class.
[Thom Hartmann]: Right.
[Senator Bernie Sanders]: All right, I'm going to run because I'm going to have to vote in a minute. But Thom, thanks very much.
[Thom Hartmann]: Ok. Sure. sanders.senate.gov the web site. Thank you, Bernie.
And by the way, speaking of the banks, Mitsubishi UFJ, Mitsubishi Bank is buying ten to twenty percent in Morgan Stanley. They hold $1.15 trillion in deposits. They spent $100 billion in August to buy UnionBanCal corporation, the Bank of California.
Transcribed by Sue Nethercott.