Eamonn McCann: Why isn’t Obama quizzing Bush over bail-out billions?

Sooner or later, the American people will see through Obama’s lack of transparency.

But by then, it will likely be too late. The beneficiaries of the $700bn bail-out — with soft loans and subsidies, $2trn — will be laughing all the way to whichever tax-shelters they have been skulking in since the hurricane hit.

Last week, senior Republican representatives lashed out at the secrecy surrounding the dispersal of this vast sum of public money. But from the eloquent Obama, not a whisper.

This despite having made a very big deal of transparency during the election campaign.

On 22 September, 12 days before Americans trooped to the polls in unprecedented numbers, Obama declared that he would “make our government open and transparent so that anyone can ensure that our business is the people’s business”.

The Bush administration too, at that point, was pledging that the process would be open to scrutiny. They had little option. There was massive opposition to a rescue at the people’s expense of the very entities whose greed had pulled the economy down in the first place. Bush had to promise all would be above board.

On 23 September, Treasury Secretary Henry Poulson told the Senate Banking Committee: “We need oversight. I want it. We all want it. More than anything, we need transparency.”

Next day, Federal Reserve chairman Ben Bernanke told a joint meeting of the House and the Senate: “Transparency is a big issue”, and that he personally would ensure that nothing about the bail-out would be kept from Congress.

But far from holding the Fed and the White House to their words, Obama, within days of his jubilant triumph, had substituted “orderly transition” for “change” and appropriately adjusted his line on transparency.

Asked at his only Press conference since 4 November why he didn’t challenge the failure of the administration to deliver on transparency, he offered lamely that: “There can only be one president at a time.”

Quite so, but this is a president with only weeks left in office and wholly dependant on Democrat majorities in the Senate and the House to deliver on anything.

The Democrats too, however, anxious not to rock Obama’s boat, have kept strictly schtum.

Astonishingly, it’s been left to Republicans to rubbish Bush for reneging on the assurance of openness.

Senator John Cornyn of Texas said last weekend: “There cannot be accountability in government and in our financial institutions without transparency.

“Many of the financial problems we face today are a direct result of too much secrecy and too little accountability.”

More pointedly, House Republican leader John Boehner, Ohio, reminded Obama that: “During the bipartisan negotiations between Congress and the administration, members of both parties made clear that Congress must have meaningful oversight of the use of taxpayer dollars.

Transparency is even more important now, given that the programme appears to have been implemented in ways that were given little or no discussion as Congress was being urged to pass the rescue plan.”

Representative Scott Garret of New Jersey says of the bail-out: “It’s now impossible to get to the bottom of where we are because we don’t have transparency.”

After all the hype and hullabulloo, nobody apart from Bush officials and the various beneficiaries appears to know what’s happened to the bail-out billions. Obama isn’t pushing them to come clean.

On 10 November, the Federal Reserve, pressed by the business news service Bloomberg, refused to identify the recipients of the $2trn or to reveal what assets the Reserve had accepted as collateral. Bloomberg commented: “Americans have no idea where their money is going or what securities the banks are pledging in return.”

Bloomberg has now lodged a Freedom of Information request for the information and launched a lawsuit against the Reserve.

Approached separately, America’s biggest banks — Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley — have all refused to say whether they had received a share of the two trillion.

The radical writer Naomi Klein suggested a possible reason for this all-enveloping silence — that the bail-out has been handled not only incompetently but in a way that is “borderline criminal”.

She quotes one of the architects of the deal, Congressman Barney Frank: “Any use of these funds for any purpose other than lending — for bonuses, for severance pay, for dividends, for acquisition of other institutions, etc — is a violation of the Act.”

“This is exactly how the funds are being used,” suggests Klein.

This would explain the obdurate refusal of the White House or the Federal Reserve to say what they've done with the money. It would also explain the silence of the institutions most likely to have benefited.

But what explains the silence of Obama?

He did, of course, receive more money from Wall Street for his presidential campaign than any other candidate, ever.

Disillusion with Obama will be swift. The decline in his reputation will be steep.

This column was orginally published in the Belfast Telegraph www.belfasttelegraph.co.uk