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« Thursday Afternoon Links (15 Stories July 23, 2009) | Main | President Obama Discusses Goldman Sachs, Wall Street Compensation & Financial Regulation (PBS Jim Lehrer Video 7-20) »

Kanjorski Asks Paulson To Describe His Greatest Fears From The Financial Meltdown (Congressional Clip)

More from Hank Paulson's Congressional testimony last week.

The following exchange is extremely important, especially considering this background of Kanjorski on C-Span discussing the closed-door Congressional meetings where Paulson made threats of chaos and Martial Law if the bank bailout (TARP) were not passed.

Rep. Kanjorski: "Please describe the meltdown.  I'm hoping that you may remember whether questions of law and order were asked.  Whether questions of the capacity to feed the American people, and for what period of time, were asked?  I'm not going to say what I remember the answers to be." 

Paulson begins speaking at the 3-minute mark:  "If no action were taken...it could lead to chaos or even people questioning the basic [banking] system (5:15)."

Kanjorski offers him: "People who say we would have gone back to the 16th century were being optimistic."

Pauslon responds: "I asked Bernanke the same question.  He said look at the depression, there's your answer."

What a friggin' joke.  This is the exact same fear-mongering that was used during the crisis to get the bailout heist passed originally.  And it's an example of the disingenuous behavior that Rep. Kaptur complained about so bitterly.  By the way, they are talking about a run on the banks in this exchange but of course in abbreviated code-speak.

Rep. Kanjorski set off a firestorm a few months ago with this C-Span clip about the secret meetings with Paulson and Congressional leaders during the crisis last Fall.  If you have not seen it, I recommend that you find the time to do so.  It will leave you perplexed and angry.


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Reader Comments (18)

Rep. Kanjorski asks some very good questions, but this is more damage control for his own constituents than anything meaningful. Mr. Kanjorski has quite a few skeletons, not the least of which is his silence on the infamous meetings with Bernanke and Paulson on September 15, 2008, September, 18, 2008 and October 3, 2008 for 4 FREAKING MONTHS until the the CSPAN interview on January 27, 2009, where he finally spilled the beans to defend the bailouts from increasing public backlash. We were spooked is not an adequate excuse for someone the American people rely on for their safety and well being.

"I'm hoping that you may remember whether questions of law and order were asked. Whether questions of the capacity to feed the American people, and for what period of time, were asked?"

Obviously Paulson and Bernanke could give a $#!t abouth those questions. Did you or anyone else at the infamous meetings bring them up either. No, because you didn't give a $#!t either. You failed and will likely be voted out, credible justifications for giving into the heist or not. You failed! Keep on cashing those NAR, Sallie Mae, Fannie Mae, Bank of America, and LaBranche & Co. bribe checks. Unfortunately New Century Financial is no longer around to keep the bribes flowing.
Jul 23, 2009 at 7:34 AM | Unregistered Commenterspideydouble

I question the veracity of a run on the banks, electronic or otherwise. Our fellow citizens are so highly leveraged on mortgage debt, HELOC ATMs, and credit card dept, it is not even funny anymore. There is little or no savings to make a run significant in my opinion. What were they expecting people to do, take out the remaining balance of their HELOCs in cash? Right. No, this was about propping up the stock prices of Fed member banks pure and simple. More smoke and mirrors.
Jul 23, 2009 at 7:45 AM | Unregistered Commenterspideydouble
07:06 Hank Paulson: "I didn't want to ever get to the point where we could really understand it."

No $#!t. And didn't want anyone else to really understand it either. And don't want us to understand it to this day. This statement says it all folks. It is tacit acknowledgment that they buried their collective heads in the sand and why no other alternatives were considered or will ever be considered. To big to fail is a very profitable a priori fall back - for some. Unfortunately, it isn't us.
Jul 23, 2009 at 8:21 AM | Unregistered Commenterspideydouble
Kanjorski tossed Paulson the softball of all softballs and Paulson whiffed. I kept waiting for the explanation we've all been demanding: what is the chain of causality, step by step? Didn't happen. Instead, Paulson backpeddled, totally shied away from terms like "16th century," and made a half-hearted attempt to pin it on Bernanke. But Paulson didn't have to do the fear-mongering this time. Kanjorski did a credible job on his own.

In any case, all of this bank-run talk brings up something I've been thinking about for a while now. I don't for the life of me know why anyone keeps a bank account with TARP banks like Citi or Bank of America. 1. You're keeping them alive. 2. What if they did get shut down -- how soon could you get your money? America, demand those deposits NOW. Everybody. They would have to step in and resolve these suckers at that point. But what are the chances of J6P bothering to change banks? This is one case where the power is clearly in our hands -- it's just that people aren't sufficiently motivated.
Jul 23, 2009 at 8:21 AM | Unregistered CommenterJames H

I'm not saying a run would have happened at all...I was trying to point out what Paulson TOLD Congress would happen if they didn't do what he said...behind closed doors, they talked about martial law and a run on teh banks, but they (paulson and treasury) still won't admit publicly that they used such outlandish fear-mongering in order to win passage.

I attempted to convey this point in the story, but didn't make myself clear.
Jul 23, 2009 at 8:28 AM | Registered CommenterDailyBail
Paulson himself in the clip won't even come out and say much...he's careful to avoid mentioning certain things that we're definitely mentioned in these meetings.



It's vital to understanding the background on Kanjorski and Paulson and these closed-door Congressional meeting last Fall.
Jul 23, 2009 at 8:32 AM | Registered CommenterDailyBail
Daily Bail,

Yes, I think you're exactly right. Paulson (as well as a whole bunch of other people, probably) doesn't want us to know exactly what they said because most of us aren't as clueless as Pelosi, Dodd, Frank, McCain, Obama... and we could call them out on their lies. Has anyone filed an FOIA request on the nightmare meeting Paulson and Bernanke had last fall? (Does anyone know how to file one? I don't.) It might be interesting just to see what kind of response that request would get -- if they claim some kind of state secret privilege or whatnot then you know it's probably all hyperbolic bullshit.
Jul 23, 2009 at 10:12 AM | Unregistered CommenterJames H
I saw Senator Lindsey Grahm (sp) from SC getting HAMMERED on FOX for voting FOR the bailout the 1st go round and currently criticizing Obama's handling of the economy. Graham said....(paraphrased) "I voted for it because they told us on Friday that the global financial system would end..... come Monday.... and we along with half of Europe would be under martial law." Republicans are as stupid or are as in on this heist as Goldman, Paulson, and all of Wall Street. How can a business model that pays 50% of it's annual profits to employees be good for it's clients? Where is the value? We get paid to rape folks and since it's dirty work...we feel 1/2 of it all is justifiable......Sounds like the Mafia business model. There is no justice in this world, when delivered by the hands of corrupt men.......AB
Jul 23, 2009 at 10:20 AM | Unregistered CommenterAin't Bullshittin'
Finally! Someone puts the most important thing the world faces "and has faced" on display in one easy to use site! Well done my friend! Well done.
Jul 23, 2009 at 11:14 AM | Unregistered CommenterGuest
A FOIA request for transcripts of the closed-door meeting is an interesting idea. I would like to find out if there were even notes taken. I wouldn't be shocked if The Hammer demanded that no records be kept.

After all he was trained under John Ehrlichman.

And the Nixon White House and everyone in it, definitely learned the lesson about note taking and tape recording.

Did anyone else notice HP's comments about never using email...I would not be surprised if it were his training under Ehrlichman that influences this decision not to leave a computer trail?
Jul 23, 2009 at 12:38 PM | Registered CommenterDailyBail
Traffic is rocking this week. We are currently trending toward the 5,000th most popular site on the internet for the month of July according to Quantcast.

Everyday still 75% our traffic is brand new...the IPs never having been recorded on our site once before. Our goal at the Daily Bail is to help create and promote awareness, and higher traffic means more awareness.

Sending emails of our stories really, really helps....we regularly have 3,000 people per day who arrive from emailed links. Thanks to everyone who helps out by sending those emails to your family and friends.. Thanks to those who re-tweet our stories, or those who post them on Facebook (500 of you per day come from Facebook links alone), or on Reddit, and thanks to Disinter for posting our stuff on WRH. We've never met, but I really appreciate how you help and continue helping. Thanks

I hope everyone sees that it's a team effort, and you guys are by far the biggest component. I could write all day and no one would read it if you weren't working so hard to spread the stories.

One more thank you!

Peace Out.

Jul 23, 2009 at 1:10 PM | Registered CommenterDailyBail
"I wouldn't be shocked if The Hammer demanded that no records be kept.

After all he was trained under John Ehrlichman.
Did anyone else notice HP's comments about never using email..."

I had thought about that -- no notes taken, but that he might have demanded it is a likely scenario, too. Didn't catch that bit about email -- WTF? That's a pretty telling admission. That's what I like about this site -- no nutjob conspiracy stuff, just a hard, agnostic look at the facts. Kind of like the Glen Greenwald of fiscal and financial crime.
Jul 23, 2009 at 1:50 PM | Unregistered CommenterJames H
Check out Bloomberg....FASB is back on the Mark to Market accounting bandwagon.
Jul 23, 2009 at 2:50 PM | Unregistered CommenterAin't Bullshittin'
Thanks AB...found it...


This one will be a serious fight.

And here's the statement from FASB's website...short and sweet...no mention of a date for submission of ballots for FASB members to vote on it...

Jul 23, 2009 at 3:11 PM | Registered CommenterDailyBail

I've added your commentary to this post...good stuff...

Jul 23, 2009 at 4:37 PM | Registered CommenterDailyBail
Ever the contrarion...

Is it at least possible that he is serious and honest? I remember those days as clearly as anyone who drinks as much as I do possibly could, and it was scary. It may not have resulted in a depression, that seems so ridiculous considering the dynamic extent of the economy, but it was a clear cut melt down. And Paulson was supposed to be there to make sure it didn't happen. I run a mid-sized company, ($150mm) and have to make tough decisions, many of which are dissected later by those affected. Never has anyone's theory been correct, the decisions were made, often with little time for consideration, with the best of intentions for the company.

I can only imagine how difficult it had to be for Paulson to be in that position. How many people were in his ear screaming disaster? The markets were melting world-wide and doing nothing was not an option. It is fair to say that this wasn't the best solution, but once this path was taken, it was hard to find a fork in the road to head somewhere else.

In the end, this is where we are, and if this site and others like it can use this mistake as the reason to clean house in Washington, then it was a relatively expensive indulgence, but one well worth the spend. Remember, it isn't just the other Senators and Representatives that suck, it's yours too. They are all part of the equation. Vote yours out.

A clean up is still possible...
Jul 24, 2009 at 8:25 AM | Unregistered CommenterOberon4life
Good post Oberon:

I appreciate your thoughts which were well-stated and pretty hilarious (in a good way)...I agree 100% with your commentary on voting out the guilty...

However, I would suggest that it's possible you fell for the fear-mongering...there was no meltdown that would have occurred...it was already happening...the world would have survived without Goldman, Morgan and Citi...there are many smaller investment banks who were not so leveraged who would have seized the opportunity to gain massive market share and talent from teh failed firms...

Brilliant minds from Jimmy Rogers to Chris Whalen to Nobel Laureate Joseph Stiglitz (the list is endless...Dr. Galbraith comes to mind as well) all have said that the Paulson bailout should not have happened...we are not the only ones....

Also, much stronger credence should have been given to the option of creating 7 new banks each with $100 B of new capital... Joseph Stiglitz has called for this exactly in fact...
Jul 24, 2009 at 4:37 PM | Registered CommenterDailyBail
I will add further that the idea of creating 7 new banks was floated during the 3 weeks of non-debate on this issue...

This was teh best option by far...however, this option would not have saved any of Paulson's cronies...so it was never considered...

Never under-estimate the power of friendships...witness this reality...Paulson first makes sure that Dick Fuld and Lehman are NOT saved (to benefit Goldman as Lehman was their largest competitor in many markets), and then HE MAKES SURE that AIG is saved so that it's failure doesn't hurt Goldman (GS then gets a $13 B straight up free cash infusion from AIG), and then he creates TARP and runs to Congress and holds them hostage against the idea of Martial Law until they pass his plan.

Now that's what really happened.
Jul 24, 2009 at 4:46 PM | Registered CommenterDailyBail

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