US Senate Bailout Bill: Secretly Designed To Help Foreign Banks

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The US Senate banking bailout bill still giving $700 Billion to the Treasury to buy troubled mortgage backed assets held by banks…even foreign banks…will get a vote tonight. The Senate bill is about 350 pages longer than the failed House bill to incorporate tax breaks and increased depositor insurance among other earmarks.

US Senate Foreign Bank Bailout Bill

With the unadulterated powers both the House and Senate bill gives the Treasury Secretary, current Secretary Paulson will be writing huge checks to foreign banks in exchange for their toxic mortgage-backed securities. I understand banking is international, but why hasn’t the mainstream media picked up on the fact that this bill was designed not to bailout OUR banks…but the banks in China, Japan, and Europe.

Here’s the bill…you can read it yourself.

The Section dealing with forgein bank purchases is Section 112 where it says,

SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS.

The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101.

Here is a transcript of Kudlow and Co. show where Representative Brad Sherman outlines how Paulson clearly designed this bill to pay off foreign investors.

Rep. Brad Sherman, D California:

“Larry I am glad you have a few seconds to talk to someone who voted against this bill. I am not changing my mind. I want to thank my colleagues who stood up to the purveyors of panic and voted against a very bad bill and voted with 400 eminent economists including three Nobel laureates who wrote to us and said don’t panic, don’t act hastily, hold hearings, work carefully. The fact is Larry if you read this bill, even you would have voted against it.

It provides hundreds of billions of dollars of bailouts to foreign investors. It provides no real control of Paulson’s power. There is a critique board but not really a board that can step in and change what he does. It’s a $700 billion program run by a part-time temporary employee and there is no limit on million dollar a month salaries.”

Larry Kudlow:

“Let me just ask you one question. I think you are referring to foreign banks headquartered in the United States. I do not see how foreign investors get bailed out.”

Rep. Brad Sherman:

“Larry you have to read the bill. It’s very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn’t owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can’t buy it. It was rejected.

The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can’t be sold to the Treasury.

Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.”

Do you think the average American voter would be calling his Senator asking for this bill to pass if he knew that Paulson put this foreign bank bailout provision in there…and Paulson threatened a veto if it was removed?

I don’t think so…

What Senate Bailout Bill Does Not Include:

1) Help for Americans facing foreclosure.

2) Limits on executive pay.

3) Reform regulation of mortgage back securities to stop this from ever happening again.

4) Congressional approval over assets purchased.

Call your US Senator and tell him to vote down this foreign bank bailout bill – US Capitol Switchboard: 202-224-3121

Good Luck!