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 didn’t 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 “The Pat Campbell Show” 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.
“We had a conference call early on,” Inhofe said on Nov. 18. “It was on a Friday I think – a week and half before the vote on Oct. 1. So it would have been the middle … what was it – the 19th of September, we had a conference call. In this conference call – and I guess there’s no reason for me not to repeat what he said, but he said – he painted this picture you just described. He said, ‘This is serious. This is the most serious thing that we faced.’”
“He said, ‘This is going to be far worse than the Great Depression in the ’30s,’” Inhofe said. “And all these things – he was very descriptive of exactly what would happen if, if we didn’t buy out these toxic assets which he abandoned the day after he got the money.”
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 CNN’s Nov. 18 “Lou Dobbs Tonight” 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.
“I have introduced a bill and it’s called Senate Bill 3683,” Inhofe said. “And, it would freeze any further spending. And if you look at what’s just left now and the $350 billion that would come up, I’m very much disturbed because there is a process to enter into that, to access that $350 billion. That means if we’re not here in session, then it’ll be done unilaterally by the Treasury Department.”
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Inhofe later appeared on Fox News Channel’s Nov. 18 “Hannity & Colmes” and said Paulson made the same warning, but he also put this size of the bailout in perspective.
“Now, you know what really bothers me – and a lot of people that talk about these big numbers and don’t realize how big this is,” Inhofe said. “I took the time to count and there are 139 million taxpaying families that file returns. If you do the math, that’s $5,000 a family. Now that’s why this is such a big thing here – and to give all that power to one person.”
Paulson’s tactic of using the Great Depression is similar in nature to what the media have done in their coverage of the