For several days there was a fierce national debate over whether American car companies in Detroit deserved $25 billion of taxpayer money and whether American jobs should be saved. The automakers and a union representative were ridiculed, didn’t get the money, and were told to come up with a “plan” to save the companies. After backing the $700-billion Wall Street bailout, Bill O’Reilly of Fox News said Detroit didn’t deserve any federal money because the car companies had been mismanaged. This was a point made by many in the media.
But Citigroup got $20 billion over the weekend from the Treasury Department without any national debate or discussion at all. The Federal Reserve simply issued a press release on Sunday afternoon announcing that the taxpayers were on the hook not only for the $20 billion but $306 billion in loans to the company. That’s on top of a previous $25 billion invested in the company by the Treasury Department.
It will be interesting to see if O’Reilly and other commentators, having excoriated the American automakers, will take issue with the Citigroup bailout, which was subjected to no public debate and no congressional hearings.
Auto company executives may have flown to Washington, D.C. on private jets, as O’Reilly and others noted, but Saudi Arabian prince Alwaleed bin Talal, who has a major stake in Citigroup and also invests in the Fox News parent company, News Corporation, reportedly lives in a $100-million 317-room Riyadh palace. A nephew of Saudi King Abdullah, Alwaleed has been called the “Warren Buffet of the Gulf” and runs the Kingdom Holding Company.
Is this somebody who should be bailed out by American taxpayers?
The Citigroup bailout demonstrates, once again, that the Federal Reserve does anything it wants with our money, with no accountability to the Congress or the American people.
The Federal Reserve is so out of control that it refuses to comply with a legitimate and lawful Bloomberg News Freedom of Information Act (FOIA) request for information about nearly $2 trillion in loans extended to foreign banks and other interests during the current financial meltdown.
Members of Congress, including Rep. Walter Jones and Senator John Cornyn, have expressed outrage at the Fed’s conduct.
Jones declared, “At a time when many Americans have serious concerns about their own financial security, it is important for our nation to have confidence in the actions of the Federal Reserve. When taxpayer dollars are used to bail out financial institutions, the American people deserve full disclosure on who receives those funds and under what terms. Americans need to know how their hard-earned dollars are being spent.”
Cornyn declared, “Over the past year, the Federal Reserve has taken unprecedented action in the marketplace by providing almost $2 trillion in taxpayer-funded loans to troubled financial institutions. This is in addition to the $700 billion approved by Congress to fund the Troubled Asset Relief Program (TARP). Unfortunately, the Federal Reserve has refused to submit to even the most modest level of transparency regarding its actions. This should trouble taxpayers and policymakers alike. It certainly troubles me.”
Announcing the Citigroup bailout, the Federal Reserve said that “With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy.”
That sounds reassuring. But another and more accurate way to put it is to say that U.S. tax dollars are being pumped into a failed bank to save a Saudi prince. But will the American people be given the true story of the Citigroup bailout?
Consider the fact that Alwaleed, one of the richest men in the world, not only owns a stake in Citigroup but News Corporation, Time Warner (parent of Time and CNN) and The Walt Disney Company (parent of ABC News).
The stories appearing on Monday about the “rescue” of Citigroup suggest that the media are up to their old tricks of masking the looting of American taxpayers and will not bother to investigate what really happened.
Some of the details are available on Alwaleed’s website. “Perhaps no single transaction has catapulted Prince Alwaleed to the world’s financial stage in as spectacular a fashion as did his acquisition in 1991 of Citibank (subsequently, Citigroup) stocks,” notes his website. “Few people could then imagine that a Saudi Arabian, and a royal at that, would burst onto the international scene, seemingly out of nowhere, to invest so heavily in one of the major banks of the world and to help restore it to such health that it would become the leading financial institution in the world.”
And now that the firm is in trouble, the Federal Reserve―and by extension, the U.S. taxpayer―comes to his rescue.
Not surprisingly, Alwaleed was included in the “Time 100” 2008 list of most powerful people. “In the mid-’90s, he bailed out Citibank when no one else would step in—including Americans,” stated Alwaleed biographer Riz Khan, formerly of CNN and now with Al-Jazeera.
“Saudi prince comes to rescue of Citigroup” was a headline over an article in the UK Guardian on November 20, 2008, when Alwaleed announced that he would increase his stake from about 4 to 5 percent in Citigroup. But that clearly wasn’t enough to make a difference. Did he invest more knowing that he would ultimately be bailed out? Will we see any stories on this? Or congressional hearings?
What happened behind closed Federal Reserve doors?
It is important to note that Alwaleed isn’t alone. Earlier this year, the story in the Guardian noted, Citigroup “raised more than $50 billion in new capital from sovereign wealth funds and other investors.” This included the Kuwait Investment Authority investing $3 billion in Citigroup in January and the Abu Dhabi Investment Authority buying $7.5 billion of securities from Citigroup in November 2007.
“Over the weekend,” the British Telegraph reported, in discussing the bailout, “Citigroup was understood to have approached its existing sovereign wealth fund shareholders from the Middle East and Asia to gauge their appetite for buying additional stakes in the bank, as well as holding talks with the US government.”
It looks like the foreigners with a stake in Citigroup preferred a U.S. taxpayer bailout. They got something quickly and secretly that the U.S. automakers haven’t yet obtained from the Fed, the Treasury Department, or Congress. GM, Ford and Chrysler are American companies in competition with foreigners, who have their own auto production plants on U.S. soil. If Detroit ever gets the money, it will come after intense negotiations and detailed legislation providing conditions for repayment of the money. In exchange for the money, they will be made to resemble the foreign firms.
The rationale for letting the “Big Three” fail is that we don’t need American car companies anymore. On the other hand, we need foreign money and foreigners to invest in our country and our firms.
This is America today―a country that is losing its ability to manufacture things but has to continue to pander to rich Arabs and the Chinese Communists for money just to survive. In addition to our jobs, savings and investments, it looks like our sovereignty and national pride are being sacrificed as part of this process.
Whether the financial meltdown has been engineered or not―and there are major questions about its timing, just six weeks before the national elections―it will be up to President Obama to manage America’s transition into this New Global Order. With his background in Marxism and extensive Wall Street contacts and associations, he seems perfectly suited for the task.
But the powers that be, including those in the media, have simply assumed that the American people will meekly go along with the demise of their nation. That may be a miscalculation, if they manage to find a voice or voices in the media.