Was It Blackmail?

Bloomberg had an interesting, yet disturbing story recently, written by Eliot Blair Smith.

Former Treasury Secretary Henry Paulson, saying nine U.S. banks were “central to any solution” of the credit crisis, told their leaders to take government aid or be forced to by regulators, according to a memo prepared for an October meeting.

“If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance,” Paulson’s one-page list of talking points for the session with the banks’ chief executives said. “We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed.”

“Most Americans are going to be uncomfortable with the government forcing the banks into this arrangement,” said Tom Fitton, president of Judicial Watch, a nonprofit research group in Washington that obtained the documents under a Freedom of Information Act request.

I agree but just how “responsible” will the media be and see that the taxpayer knows of this situation?

In his memo, Paulson said the government would buy preferred stock in the banks, which he called “a significant part of our financial system” and “central to any solution.”

Three and a half hours after the meeting was scheduled to begin, Paulson had obtained the bankers’ signatures on half-page forms along with the handwritten amount of the federal government’s investment, according to the documents. He announced the actions publicly the next day.

In releasing the documents yesterday, Judicial Watch said Treasury initially said it had no records about the meeting.

The American people should know all the conditions of the bailout or the promise of transparency was nothing more than a campaign promise that did not come true.

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