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Thursday, May 14, 2009

Former Secretary Paulson Offered Little Choice To The Bankers

"If a capital infusion is not appealing," reads former Treasury Secretary Paulson's just-released "Talking Points" memo of his talk with the nine bank heads last October, "you should be aware that your regulator will require it in any circumstance." Called by both Paulson and Federal Reserve Chairman Ben Bernanke as one of the most important gatherings of bankers in American history, the one-hour meeting between the nine executives and government officials is being scrutinized now that the agenda is out in the sunlight.

JudicialWatch obtained documents through the Freedom of information Act showing the almost frenzied response of the Bush administration to the changing economic landscape in the thick of the 2008 election. The "Talking Points" appear to show that former Secretary Paulson offered the nine banks little choice in accepting bailout monies. From Bloomberg:

"Former Treasury Secretary Henry Paulson, describing nine U.S. banks as 'Central to any solution'of the credit crisis, told their leaders to take government aid or be forced to by regulators, according to a memo his staff prepared for a private meeting in October.

"'If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance,' Paulson’s one-page list of talking points for the session with the banks’ chief executive officers said.

"'We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed,' the memo said.

"Investing $125 billion in the financial institutions was a shift for the Bush administration, which had proposed buying troubled assets with $700 billion Congress approved 10 days earlier. The memo is among newly released Treasury Department documents containing details about the Oct. 13 meeting.

"'Most Americans are going to be uncomfortable with the government forcing the banks into this arrangement,' said Tom Fitton, president of Judicial Watch, a nonprofit research group in Washington that obtained the documents under a Freedom of Information Act request.

"Andrew Williams, a spokesman for the Treasury, didn’t return calls seeking comment."

More here.

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