RUSH: So have you seen the lead paragraph in the McClatchy news story today? Well, let me read it to you. ‘While Goldman Sachs’ lawyers negotiated with the Securities and Exchange Commission over potentially explosive civil fraud charges, Goldman’s chief executive visited the White House at least four times.’ My friends, do not doubt me. I wonder what happened in those four visits of the CEO of Goldman Sachs, Lloyd Blankfein is his name, I wonder what happened. I can imagine it. I can just imagine it. The president says, ‘Hey, don’t fret, Lloyd. We have to do this first. We have to charge you guys, the SEC, we have to do this first before we can partner up in private and run all your competition outta business.’ But Obama says, ‘Oh, we learned about this on CNBC. We didn’t know about this ’til we watched it on CNBC.’
Anyway, folks, it’s great to have you with us, here we are three hours of broadcast excellence straight ahead on the EIB Network. Telephone number if you want to join us, 800-282-2882, and the e-mail address ElRushbo@eibnet.com.
The market is plunging, down 84 points since Obama began speaking, Honest Obe speaking now at Cooper Union. It was supposed to start at 11:30, didn’t start ’til ten ’til noon. I wonder why. He-he-he-he. We’re not going to JIP any of it. We’re rolling on it, but the whole thing is typical Obama, typical setup, it’s a head fake, it’s to get everybody looking in the wrong direction while something else actually happens. This is all about pushing his financial regulatory reform bill, and I was just reading the closed-captioning, he just said it’s not correct to say that this is a bailout bill. It most certainly is. It is indeed a bailout bill. It’s a bailout bill or a destroy ’em bill. The regulatory powers the executive branch is going to have after this bill passes is just another piece of the puzzle being put together to totally convert this from a private sector free-market economy to a command-and-control economy with the command-and-control coming from the regime in Washington.
Nicole Gelinas has a great piece today at the Investor’s Business Daily on the op-ed page. She also writes for the New York Post, and the headline of her piece: ‘Wall St. Bailouts Would Be Invited, Not Prevented, Under Dodd’s Bill —
President Obama castigated Senate Republicans last week for opposing Sen. Chris Dodd’s Wall Street ‘reform bill.’ Democrats say Republicans’ main argument — that the bill won’t prevent future bailouts — is false. The bill itself, though, is irrefutable evidence that the Republicans are dead on. Senate Minority Leader Mitch McConnell started the fight earlier in the week when he said the bill ‘not only allows for taxpayer funded bailouts for Wall Street banks, it actually institutionalizes them.’ The White House and congressional Democrats have hit back hard. ‘I am absolutely confident that the bill that emerges is going to be a bill that prevents bailouts,’ Obama said.’
How can this literal know-nothing be so confident what he’s talking about? He told us all these wonderful things that were not and were going to be in the health care bill. What is in his background that makes anybody have any confidence he knows what he’s talking about? This question occurs to me more and more now. Who is Barack Obama? Where is it written that Barack Obama, of all people in this country, is qualified to regulate the financial services industry? Where is it written that Barack Obama is qualified to manage, control, design, and run the health care industry in this country, one-sixth of our economy, where’s the experience, where’s the resume, where is the training? Why do we assume that just because he’s been elected president and we got a bunch of know-nothings in Congress, they happen to be the experts? They get to cause all of these problems, then they get to act like spectators who were watching along with the rest of us and then they spot a bunch of fraud and say, ‘Look at how bad the capitalist system is. Look at how rotten the free market is. Unfettered free market, we never intended that, it’s not a free ride.’
Obama’s bashing the free market again today. Who’s he? I know he’s been elected president but why is he reacted to — this will make him mad, too — why is he treated like Moses coming down from Mt. Sinai after a conversation with the burning bush? And that’s exactly how he’s being portrayed to us. This guy is coming down from the mountain, he’s got the tablets, he’s got the Ten Commandments, he’s Moses, he’s talked to God or whoever, he has all the answers. Where did this get conferred? Who conferred all of this on Barack Obama? Tim Geithner, by the way, was even stronger on this bailout business. He said the bill ‘will ensure that ‘if a major institution manages itself to the edge of the abyss, we’re able to … dismember them safely without taxpayers being exposed to a penny of loss.” Now, doesn’t that make you feel good? To have the government discuss how they will deal with a business they think has crossed the line. Dismember? Is that kind of like how when you rip kids’ tonsils out for profit? Do you realize the power that they are granting themselves here? And they say, ‘without taxpayers being exposed –‘ guess who’s going to be exposed? Taxpayers, because the taxpayers are the shareholders. The taxpayers are the investors. And the taxpayers are the employees of these firms that are now gonna come under command-and-control authority of the regime.
Ask the bondholders at Chrysler how it is to do business with the regime. They’re called greedy ’cause they want to get paid back on their investments when everything goes belly up. Obama said they’re the problem. Too much greed. ‘Chris Dodd was the bluntest: ‘The bill as drafted ends bailouts. Nothing could be more clear,” says the man who helped ruin our economy. ‘In the 1,336-page text, though, Dodd left room for regulators to be generous with citizens’ money. For example, the bill would direct the FDIC, which would wind down too-big-to-fail financial firms, to operate under only ‘a strong presumption that creditors and shareholders will bear the losses.” Duh! And what are they if not taxpayers? ‘The bill would direct the FDIC, which would wind down too-big-to-fail financial firms, to operate under only ‘a strong presumption that creditors and shareholders will bear the losses.” Meanwhile, ladies and gentlemen, over there is Fannie Mae and over there is Freddie Mac, and they have been bailed out and will continue to be bailed out to the tune of hundreds of billions of dollars by the regime. They are effectively now being run by the regime. They were a combination private sector, government-owned operation, was always an oxymoron to me.
So we’re not going to hold them accountable because they’re Uncle Sam. Over there, Fannie Mae, over there, Freddie Mac, we’re not going to hold them accountable because they are the government, they are the regime. But these private sector people, these investors and these shareholders, they’re the ones who are going to bear the losses. Now, you might ask, how is an investor supposed to gauge what company is going to be too big to fail, and what is it that’s going to have the regime cracking down on these firms? Is it that they make too much profit? If they make too much profit should they not invest in the firm that makes too much profit because a firm that makes too much profit is going to be targeted by the regime? Do they just try to pick losers to invest in knowing that the regime will be sympathetic to these people? ‘As for whether the bill puts taxpayers at risk: failed firms must repay ‘any amounts owed to the United States, unless the United States agrees or consents otherwise.” (laughing) He means that the Feds and the Congress can forgive repayment. That’s what this means. ‘Any amounts owed to the United States, unless the United States agrees or consents otherwise.’ So the command-and-control economy under the authority of the regime will be able to forgive loans, pick winners, pick losers. I wonder on what basis they will do that?
Now, Nicole Gelinas says, ‘Why would the financial firm owe Uncle Sam money in the first place? Partly because of something else in the bill: an ‘orderly liquidation fund.’ Big or complex financial firms would have to pay upfront into a Treasury-controlled $50 billion pot of money that would bear the cost of liquidating a future AIG.’ In other words, Obama’s stash. This is a tax. This is an up-front tax. They gotta put the fund in there, $50 billion that would bear the cost of liquidating the future AIG. That’s why a financial firm would owe Uncle Sam in the first place. ‘The FDIC would have the authority to use this money as it sees fit, including guaranteeing bondholders, uninsured lenders, counterparties and other creditors to a failed company just as the government did with AIG and Citigroup in 2008. The idea that the financial industry can pre-fund its next arbitrary bailout with $50 billion is a pleasant fiction. How much would an ‘orderly liquidation fund’ have needed to stem investor panic starting in 2008?’
Are you ready for the number? Twenty trillion dollars. Investor’s Business Daily has the chart, way beyond TARP, Washington has committed $20 trillion to support Wall Street since 2008, including TARP but way above it. And they’ve categorized here line item by line item how much the government has spent or bestowed on Wall Street, and it comes out to about $20,450 billion, that’s $20 trillion. So if we have spent $20 trillion in the last two years to make sure Wall Street didn’t collapse, what is a $50 billion fund going to do? ‘The true tab is not the retroactive cost. Rather, it’s what investors demand at the time of an acute crisis so as not to flee the unknowable risks of a financial system in meltdown, precipitating depression. Think about everything that Washington has done in the past two years. TARP was $700 billion; that’s easy. Outside of TARP, the Treasury said it would guarantee $3.4 trillion worth of money-market funds in the fall of 2008.’ We have told you about that story, and that’s the thing, the falling money market, that is what made everybody panic, that’s what pulled McCain off the campaign trail, that’s what everybody thought was going to start a run on every bank around the world, that’s what they had to stop, and they did it by guaranteeing $3.4 trillion worth of money-market funds in the fall of 2008, right during the campaign.
‘The Fed has purchased $1.25 trillion in mortgage-backed securities over the past year or so — providing a floor to avoid deeper housing-price declines and bank losses. It also offered $1.8 trillion to commercial-paper markets. The FDIC guaranteed up to $940 billion in financial-firm bonds and committed another $700 billion in expanded deposit guarantees, which allowed banks to avoid selling off assets at crisis-level prices. Taking Fannie and Freddie into conservatorship and guaranteeing other housing agencies and their debt? Another $7 trillion. Other sundry programs add up quickly,’ and they’ve got the table here, and it does equal $20 trillion in the last two years. So just like we look at California, these underfunded and unfunded pensions of half a trillion dollars, $500 billion, the overall indebtedness of the state, you sit there and say nothing was real, nothing was real.
Has anything been real on Wall Street? If it has taken $20 trillion, which we don’t have, to keep Wall Street above ground, has anything been real? Well, if you want to know where the $20 trillion is, we’ll link to her piece here. Investor’s Business Daily, we’ll link to it and link the table at RushLimbaugh.com where you can go line by line and see what we have spent beyond TARP, which was $700 billion.
I gotta take a time-out here, folks, we’re a little long here but this is just a prelude to what’s happening with Obama at Cooper Union today demanding financial regulatory oversight, command-and-control, the regime running your money.
RUSH: Okay, here’s the close of Nicole Gelinas’ piece at IBD: ‘Democrats can’t really believe that a $50 billion fund could avert the kind of investor panic we saw in 2008 — and if they do believe that, we’re in real trouble.’ They don’t believe that, Nicole. They just want the money to do other things with like fund ACORN under the desk. It’s a slush fund is all this is. It’s a way of getting Obama control of $50 billion via legislation. It’s the same thing that the Porkulus bill really was. It wasn’t a stimulus to the economy. It was a slush fund, the vast majority of it yet to be spent. So, anyway, ‘The Feds could not invest $2 trillion in any financial markets — Treasury bond markets, global stock markets, real estate or some combination — without distorting them. And in a crisis, global investors would expect the bailout fund to dump some assets to pay for its rescues.
‘This expectation would exacerbate price declines. The only regulation that would better protect the economy from future financial failures is a set of predictable rules…’ How novel an idea is that! ‘[A] a set of predictable rules — including consistent borrowing limits and trading rules across financial firms and securities — like those we had before the 1980s. The Dodd bill doesn’t propose such rules — and Republicans should point out that the mere idea of those rules is what really annoys the too-big-to-fail financial firms.’ We’re being scammed here again, folks.
RUSH: The New York City mayor is defending Wall Street. He did so today before Obama’s visit. It’s kind of like the pot calling the kettle… Uh, can’t say that in this case because that would be racist. But here’s Bloomberg, Michael Bloomberg, all upset about what Obama’s going to do to Wall Street. Yet he’s using his rich man’s guilt to force all kinds of taxes and regulations and laws all over New York: Trans fats, salt, you name it. He’s used his money to make himself king of New York forever. Here comes Obama, as Michael Goodwin said yesterday, to finish the job on Wall Street to really ruin it now, and Bloomberg starts whining and moaning. Now, I respect that he knows this business certainly a hell of a lot better than Obama does, but it’s a problem for me ’cause he’s done his own damage to New York, as the mayor.
RUSH: We have some audio sound bites here from Obama’s address at Cooper Union, and as you listen to this — and we have, let’s see…one, two, three, four, five of them if I use them all. We have five of them here, and as you listen to this man, as you listen to Obama, remember: You are listening to a guy who has never, ever held a real job in the productive economy. He has never, ever invested or taken a risk in a business. He has never, ever had to make payroll. He has not the slightest understanding for how commerce works. He has only resentment for capitalism. Yet this man (as I just so aptly described) is telling people on Wall Street — who risk everything, every day to make profits — that they are the danger to the prosperity of America. A man who has no idea what he’s talking about, a man who has limited — not limited! Zilch, zero, nada experience. The only thing he’s done with money is spend other people’s. He has earned it by publishing a couple of books. He is the most unqualified person in any room he enters, and yet he goes to Wall Street today to tell people there that they represent — that they pose — the great threat to the prosperity of America. Unlike, of course, the federal government! Oh, no, no! The government doesn’t pose a threat to prosperity, does it? Oh, no, no, no, no. Certainly not with this regime. So you keep that in mind as you listen to arrogance and conceit personified.
OBAMA: I believe in the power of the free market.
RUSH: You do not.
OBAMA: I believe in a strong financial sector that helps people to raise capital and get loans and invest their savings.
OBAMA: It’s part of what has made America what it is.
RUSH: But I don’t…
OBAMA: But the free market was never to be a free license to take whatever you can get however you can get it.
RUSH: Stop the tape!
OBAMA: That’s what happened.
RUSH: That’s not what it was. That’s not what it is. The free market today is the most regulated free market in the history of free markets. ‘The free market was never meant to be a free license to take whatever you can’? That is the dead giveaway of how this man sees this country. You all are a bunch of thieves. You who have anything are thieves because this country has allowed you to just take whatever you can get however you can get it, and that’s why he’s gonna cut it down to size. That’s why he’s gonna reverse this. That’s why he’s going to ‘reform’ this. Remember Obama said he felt like he was ‘behind enemy lines’ when he was working for a business newsletter in New York City. Resume tape.
OBAMA: Too often in the years leading up to this crisis, some — and lemme be clear, not all but some — on Wall Street forgot that behind every dollar traded or leverage there’s a family looking to buy a house or pay for an education, open a business, save for retirement.
RUSH: Really? O-ho-kay. So I remember the debate between Dole and Clinton ’96. Dole got in a couple shots on Clinton’s lack of character. Clinton said (doing impression), ‘You know, no attack — no attack! — ever fed a hungry child.’ I guess we’re back to this now. Trades on Wall Street destroy a family’s chance to buy a house. Trades on Wall Street deny a family an opportunity to pay for an education. Trades on Wall Street mean that it’s tougher to open businesses on Main Street. Because traders on Wall Street are trading, it’s hampering others’ ability to save for retirement. That’s the message from a guy who has never, ever held a real job in a productive economy, who wouldn’t know where to go to get a real job, whose only experience with money is spending other people’s — and here he is passing judgment on others. Here’s another sound bite.
OBAMA: The system as it stands is what led to a series of massive, costly taxpayer bailouts — and it’s only with reform that we can avoid a similar outcome in the future. In other words: A vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth.
RUSH: Now, that’s not true as we have demonstrated in Nicole Gelinas’ column today and any number of places. You’ve got a $50 billion slush fund. The regime will now be in charge of who makes it and who doesn’t, who fails and who doesn’t. What he means here, what he’s trying to convey is: ‘Instead of bailing somebody out, we are gonna shut ’em down. If we decide that they’re not worth it, we’re going to fire their management.’ They are going to be in control of it! The same people that write our tax code, the same people that gave us Social Security, the war on poverty, Medicare and Medicaid — the same people that gave you the DMV — are going to be running our financial system now. Somehow they are more qualified than experts. And the system did not lead ‘to a series of massive, costly taxpayer bailouts.’ Government action did. So we have a classic case now: The government instituting policies that create great harm on the people that have to follow the regulations. The great harm results in massive losses, huge problems caused by the government, and then the government who caused the problem gets to sit around as a spectator and say, ‘Look what you SOBs did to our economy! Look what you evil capitalists did. We’ve gotta fix this now.’ So they get to do two things: They get to destroy it, and then rebuild it in their own image. Here’s another sound bite from our man-child regime leader.
OBAMA: Markets operated in the shadows of our economy, invisible to regulators, invisible to the public. So reckless practices were rampant. Risks accrued until they threatened our entire financial system. And that’s why these reforms are designed to respect legitimate activities but prevent reckless risk-taking.
RUSH: All these straw men. The construction of Obama’s speech is a magical thing here. ‘These reforms are designed to respect legitimate activities’ of which he doesn’t see any, by the way, ‘but prevent reckless risk-taking.’ Now, what is ‘reckless risk-taking’? We don’t know. He gets to decide now. The regime gets to decide what is ‘reckless risk-taking,’ and if you are judged to be engaged in ‘reckless risk-taking’ the regime can shut you down — or fire you and your board of directors and put their own people in there; ignoring, of course, the role that risk plays in the establishment of greatness, the invention of products and services and the efficiency of markets. Now here he is. You knew this was coming. It’s time to dump on CEO pay and bonuses.
OBAMA: These Wall Street reforms will give shareholders new power in the financial system. They will get what we call a ‘say-on-pay,’ a voice with respect to the salaries and bonuses awarded to top executives. Americans don’t begrudge anybody for success when that success is earned.
RUSH: You do!
OBAMA: But when we read in the past, and sometimes in the present, about enormous executive bonuses at firms — even as they’re relying on assistance from taxpayers or they’re taking huge risks that threaten the system as a whole or their company’s doing badly — it offends our fundamental values.
RUSH: It’s also none of your damn business! They’ve paid the money back. They have paid it! All these people have paid back the TARP money. It’s none of your damn business what they pay people. They don’t care what your ‘fundamental values’ are. You don’t have the right to impose them on every entity in this country, Mr. President!
But that’s what he’s doing, folks.
RUSH: Keep in mind you’re listening to President Obama, a guy who has never, ever held a real job in a productive economy. The only thing he knows about money is how to spend other people’s. He doesn’t know how to earn it; he doesn’t know anything about capital formation; he could not have known in 2007 what was coming. He has no experience. Somebody had to tell him what was coming in 2007, meaning the crash in 2008. He didn’t have any experience to know. Somebody had to know, somebody had to tell him, for that somebody to know they had to have a hand in it. Can anybody say George Soros? Pulling the marionette strings here of our leader of the regime. This guy is such a sophist. You know the whole business of trades? We talk about the economy here being not a zero-sum game. The liberals have always wanted you to believe that somebody gets hired, somebody got fired, that if somebody got a raise, somebody got a pay cut, that if somebody’s taxes went up, somebody’s taxes went down. And the economy is not a zero-sum game. The pie is always expanding.
But trades on Wall Street are a zero-sum game. For every winner there is a loser. It affects only the wrong side of the trade. Obama doesn’t like that there are winners. That’s his problem. No leftist likes winners. It’s not fair because where there’s a winner there’s a loser. The loser feels bad, maybe the loser got shafted. But what was going on here at Goldman Sachs and the hedge fund and this John Paulson guy, these were sophisticated investors that were looking at these collateralized debt obligations, these pools of mortgages that had no value to them, and you had some sophisticated people thinking, ‘Okay, this pool is going to make money. Investors are going to come in and buy it and make money.’ Paulson said, ‘Nope, I think it’s going to bomb out, I’m going to sell short.’ He won, others guys lost. Happens every day. You take a look at the action, how many trades there are on Wall Street, there are that many winners and there are that many losers. You look at the volume, Dow Jones Industrial Average volume, whatever it is, there are that many winners and there are that many losers. It’s a zero-sum game. He thinks it’s a rigged game and he’s gonna take the rig out of it by making sure nobody wins because the regime is gonna run the show. Here’s the final sound bite.
OBAMA: We produced a proposal that, by all accounts, is a commonsense, reasonable, non-ideological approach to target the root problems that led to the turmoil in our financial sector and ultimately in our entire economy.
RUSH: Yeah, right.
OBAMA: So we’ve seen business as usual in Washington, but I believe we can and must put this kind of cynical politics aside. We’ve gotta put an end to it. That’s why I’m here today. (applause) That’s why I’m here today.
RUSH: You are the cynic. You are Mr. Cynical Politics. Non-ideological? Don’t make me laugh. Cynical politics aside, business as usual in Washington. You are defining that, pal. Reverend Wright told PBS back in 2007, this is one of Obama’s mentors, ‘People don’t realize that to be rich you gotta keep somebody else poor. Most of us don’t understand that. We enjoy the standard of living we have in the US by virtue of new poor people we keep so-called dead in developing countries and Third World countries. There’s no connecting of the dots at all. That’s amazing and disturbing to me.’ Jeremiah Wright, this is what Obama believes. He spent 20 years in the guy’s church. To be rich, you gotta keep somebody else poor. Zero-sum game. Total lack of understanding of how capitalism works, but this is what Obama believes. And he believes that every winner is a cheater. Every winner has screwed somebody in order to win. The loser has been jacked with. The loser has been defrauded. The loser’s been tricked or what have you. And too often I’m sure he’s thought of himself as one of those losers in a manner of speaking.
Gary in Ringwood, New Jersey, as we start on the phones, great to have you on the EIB Network, sir. Hello.
CALLER: It’s a pleasure to talk with you again, Rush.
RUSH: Thank you very much.
CALLER: Thank you for taking my call. Despite what family members say, that I should walk around on eggshells, I have to make this comment. If you allow this to pass with these financial derivatives, this could set a bad precedent throughout this whole economy. Like you said there’s a buy and sell for everything. If I’m in the dress business or apparel business, if I have a dress at $39.99, and two weeks later I have to mark that dress down to $29.99, could they now come in and say, ‘Well, you knew you were going to mark it down, so what you did is fraudulent.’ So they can really go with this and start to take every single buy and sell order —
RUSH: Absolutely. They can say the setting of every price is a fraud.
CALLER: We cannot allow this to happen. Otherwise our whole economy will be totally taken over. This is scary.
RUSH: Well, we mentioned that yesterday. You don’t have to own the banks, and you don’t have to literally take ’em over like you have the automobile business. To control the financial industry all you have to have is full regulatory authority. I mean rubber-stamp regulatory authority. That’s what this bill gives the regime, rubbe-stamp regulatory authority on the fly. There aren’t any rules here. They make ’em up as they go However Obama is feeling that day about the X, Y, Z widget company and did they donate to McCain or Sarah Palin. This is how regimes like this work.
John in Tucson, Arizona, I have about a minute but I wanted to get to you, sir. Hello.
CALLER: Hey, Rush, I just had a comment. Almost 25 years ago this country went through, on a smaller scale, an S&L savings and loan crisis, and what was a small percentage of S&Ls that were underfunded the Democrats came in, changed the rules and made a whole lot more of these savings and loan banks, made them underfunded and they all went belly up. We don’t have very many of them left anymore. They’re doing the same thing on a much bigger level.
RUSH: Yeah, hello Charles Keating. Well, part the whole thing. And not only that, you had tax reform in 1986, which also took away some of the deductions for real estate investments. They changed the rules in the middle of the game and that’s what led to the S&L crisis having a problem because so many of the S&Ls had invested in condo projects and commercial real estate projects, and the tax deductiblity was just yanked out from under people’s feet when this happened. But he’s gotta good point. This is just a much grander scale than what happened with the S&L crisis in the late eighties.
RUSH: In that first sound bite that we played of Obama at Cooper Union, he said a free market was never meant to be a free license to take whatever you can get however you can get it. A license to take what you want? That’s the definition of this regime. This regime is in the process of taking whatever it wants however it can get it. Usually, my friends, this is identified as theft, which is what is occurring here at the top of our federal government.