From the TUC

US banks are no better

06 Nov 2008, by in Economics

Now we have had such a bold interest rate cut, the pressure on banks to pass it on to business and mortgage paying customers will be immense. And they will need not just to cut the cost of existing loans, but also start lending again.

Tax payers will want to know why the big bail out that they have funded is not changing behaviour.

It is probably no comfort to learn that US banks are behaving in the same way.

The most powerful intervention in the debate there has come from union leader Leo Gerard of the United Steelworkers. Here’s how The Nation covered it.

“The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson’s transaction, the taxpayers were taken for a ride–a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public’s money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.

These are dynamite facts that demand immediate action to halt the bailout deal and correct its giveaway terms. Stop payment on the Treasury checks before the bankers can cash them. Open an immediate Congressional investigation into how Paulson and his staff determined such a sweetheart deal for leading players in the financial sector and for their own former employer. Paulson’s bailout staff is heavily populated with Goldman Sachs veterans and individuals from other Wall Street firms. Yet we do not know whether these financiers have fully divested their own Wall Street holdings. Were they perhaps enriching themselves as they engineered this generous distribution of public wealth to embattled private banks and their shareholders? “

Obama clearly understands the need to fix the financial plumbing and boost the US economy. It will be interesting to see what he does about the banks.

Hat tip The First Post