Inhofe: Paulson Used Scare Tactics to Force Bailout Legislation
At the time of the votes on the $700-billion bailout bill, which finally passed Oct. 4, there were dire warnings of calamity if the bill failed. Rep. Brad Sherman, D-Calif., said martial law would have to be enacted to keep public order if it didnât pass. Rep. Jo Bonner, R-Ala. said the aftermath would be comparable to the scenes in New Orleans after Hurricane Katrina.
Sen. James Inhofe, R-Okla., revealed on âThe Pat Campbell Showâ on 1170 KFAQ, a talk radio station in Tulsa, Okla., where some of these ideas in Congress may have originated. He divulged details of a conference call with Treasury Secretary Henry Paulson from mid-September, which may be behind why some members of Congress were warning of catastrophe.
âWe had a conference call early on,â Inhofe said on Nov. 18. âIt was on a Friday I think â a week and half before the vote on Oct. 1. So it would have been the middle âŚ what was it â the 19th of September, we had a conference call. In this conference call â and I guess thereâs no reason for me not to repeat what he said, but he said â he painted this picture you just described. He said, âThis is serious. This is the most serious thing that we faced.ââ
âHe said, âThis is going to be far worse than the Great Depression in the â30s,ââ Inhofe said. âAnd all these things â he was very descriptive of exactly what would happen if, if we didnât buy out these toxic assets which he abandoned the day after he got the money.â
However, nearly a month and a half later, Paulson changed course on his bailout plan. Instead of buying up troubled assets as he originally proposed, the former head of the investment bank Goldman Sachs (NYSE:GS) announced on Nov. 12 the Treasury would instead on injecting capital directly into banks, upsetting some lawmakers in Congress. Paulson had to defend this decision before the House Financial Services Committee on Nov. 18.
Inhofe also appeared on CNNâs Nov. 18 âLou Dobbs Tonightâ and said even as senior member of the U.S. Senate he just found out only $60 billion of the initial $350 billion amount remains. He also said he feared the amount of power Paulson has to do with the $410 billion remaining.
âI have introduced a bill and itâs called Senate Bill 3683,â Inhofe said. âAnd, it would freeze any further spending. And if you look at whatâs just left now and the $350 billion that would come up, Iâm very much disturbed because there is a process to enter into that, to access that $350 billion. That means if weâre not here in session, then itâll be done unilaterally by the Treasury Department.â
âWhen in the history of
Inhofe later appeared on Fox News Channelâs Nov. 18 âHannity & Colmesâ and said Paulson made the same warning, but he also put this size of the bailout in perspective.
âNow, you know what really bothers me â and a lot of people that talk about these big numbers and donât realize how big this is,â Inhofe said. âI took the time to count and there are 139 million taxpaying families that file returns. If you do the math, thatâs $5,000 a family. Now thatâs why this is such a big thing here â and to give all that power to one person.â
Paulsonâs tactic of using the Great Depression is similar in nature to what the media have done in their coverage of the