Friday, September 19, 2008

The Bush White House: Financiers Gone Wild

The Bush Presidency: Financiers Gone Wild

Those who are willing to sacrifice liberty for security shall have neither. –Ben Franklin

Throughout U.S. History, there have been several occasions where liberty has been sacrificed for security. The most notable are The Great Depression and Word War II. Today, we can add the Bush White House to the list. Under President Bush’s watch, a number of moves were made which have compromised the U.S. Constitution, and affected the liberty of all U.S. citizens. While many of these moves were made in an attempt to avoid financial panic, it is clear that two entities have increased their powerful role in the U.S. government. This essay will examine the increase of power and influence of the Department of Treasury and the Federal Reserve.

While being vigilant of a U.S. economic, there are several moves which have increased the power of his Executive Branch, and jeopardized the inner-workings of U.S. democracy. When Henry “Hank” Paulson was placed at the helm of the Department of Treasury, a true Wall Street insider was given the reigns of power. Paulson was appointed by the President, and confirmed by the Senate. Under no circumstances am I critiquing Paulson the man, however one must separate the man from the financial policies of his Treasury.

Likewise, his counter-part Ben Bernanke who once espoused “Fed transparency” has gone to great lengths to mask the Federal Reserve behind a heavily veiled curtain. Bernanke has willing admitted that Federal debts fall squarely within the powers of the executive and legislative branches. It appears that his tenure as Fed Chairman has been nothing short of reckless for the U.S. taxpayer, while beneficial to Wall Street. Today, the U.S. taxpayer is faced with a new TRILLION dollar debt. A sign of financers gone wild!

Moral Hazard and Malfeasance are the two most common themes that have been used during the tenure of the Bush administration. And, it becomes increasingly apparent that preservation of the U.S. financial engines have taken priority over the interests of the U.S. Constitution and its’ citizens. The following time-line demonstrates this case:

Initiative Date
1. Super SIV October 2007
2. Term Auction Facility December 2007
3. BCS/JPM bailouts March 2008
4. Primary Dealer Credit Facility March 2008
5. Reverse MVS Swaps April 2008
6. Investments and Collateral September 2008
7. Administrative Repeal of 23A September 2008
8. Nationalization of AIG September 2008
9. Expansion of Federal Debt
w/o Congressional Approval September 2008
10. Central Bank liquidity injection September 2008
11. Re-Invention of the RTC September 2008


Banks are considered the financial engines of growth and prosperity in the United States. Yet, all business should be tied to basic risk-reward formulas. The time-line suggests a recurrent theme of risk aversion and market manipulation on behalf of the executive branch of government, and big business. The executive branch has allowed Treasury and the Fed to increase their role, without specifying a limit to their powers. Every Fed and Treasury move on this time-line was designed to save the financial institutions of the United States. While the Bush’s Presidency has gone to great lengths to “improve” and “save” financial institutions from failure, American Democracy has clearly suffered. The fear of collapse has had the effect of near total capitulation from the U.S. government. There has been little to no Congressional opposition to the bailout of Wall Street on the taxpayer’s dime. Instead of widespread outcry about executive branch abuses, people have concerned themselves with fear from loss. Fear sells and the executive and legislative branches of government have bought into it. For many, they have scarified their liberty for temporary financial security.


Desperate times call for desperate measures. However, history clearly demonstrates that desperate times also allow more sinister forces to expand powers, and even seize absolute power. This best demonstrated with Julius Caesar and the Roman Republic as well as Hitler’s Rise to Power after the collapse of the Weimar Republic. Remember, Hitler came to power on the pre-tense of restoring order. Hyper-inflation had effected every German, but Hitler would save them. The names and dates change in history, however the themes hold true. While the executive branch of government has encouraged absolute behavior, and Congress has rubber-stamped these moves as “necessary and proper”, it is important to remain vigil of the long-term precedents established by such maneuvers. There has never been a greater time to become politically active and monitor the movements of our government.

1 comment:

AX said...

Is it any wonder that the former head of GS and another non-elected official in Bernanke have saved the Wall St. crowd at the expense of the taxpayer and Main St.? Taleb points out that these idiots have managed to lose more money in 1 year than they've ever made in their histories.

Icahn says there's no need to watch SNL anymore, just attend board room meetings....

I'm embarrassed by our country more now than when we re-elected Bush.