Courtesy of Digby, we learn of a conference call held late Sunday night between Treasury Department officials and some of the most powerful players in the financial services industry about the House bailout bill that they assumed was about to be passed – a call that they never imagined would be leaked to the public. More, including a link to the call, below the fold…
And this is indeed favoritism. Look at the major points touched upon during the call:
- As Smith notes, "The exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes."
- Naked Capitalism contributor Lune notes, "[A]ll their doomsday scenarios about Black Monday were B.S. They screamed the check had to be written by Monday, but now they're saying they actually have a few weeks before they need to cash it."
- Lune: "Ridiculously overpriced asset sales can be hidden in the details."
- Lune: Treasury admitted they "need[ed] to sweeten the pot to encourage banks to come 'voluntarily.'"
- Another commenter fires off more sales points:
- "Draft bill is very positive for both markets and our companies"
- Much explanation of Executive Comp
- Residential and commercial mortgages. But very importantly, it can be any asset.
- Excited about ability to guarantee assets in exchange for a guarantee fee.
- Sought as much authority and as much flexibility as possible.
- Eligibility: as broad participation by institutions as possible. The more participation, the more effective it will be. Want banks of all sizes or any financial institution that has a meaningful presence in the US to be interested and enthusiastic.
- Purpose is to help private sector clean up their balance sheets.
- Highest priority: make sure it works, will attract companies to participate. Warrants and exec comp. were very highly negotiated.
Bottom line: it looks as if Treasury had gotten the big investment banks a very sweet deal. In fact, it smacks of outright collusion. So what if the bailout bill got creamed in the House today? The call was trumpeting a tectonic shift toward socialism for the investor class – a de facto symptom of emerging fascism.
It's high time for Congress to get off their butts, drag Paulson and his cronies in front of Congress, and explain this call.