U.S. a Wholly Owned Subsidiary of Wall Street

Wholly-owned subsidiary: "a company whose stock is entirely owned by another company. The owner of a wholly-owned subsidiary is known as the parent company or holding company. Because the parent company owns all of the stock of the wholly-owned subsidiary, the parent company can control all of its activities."

The events of the past several weeks underscore that the United States of America and the institutions that govern it are controlled by the capitalists that run our financial systems. How can we tell that this is the case?

The rejection of the first Wall Street Bailout bill in the House of Representatives on Monday, September 29 was fueled by Congressional representatives responding to the sentiments of constituents who were calling en mass against the bill. By the time of the revote, which passed in the House on Friday, October 3 Congressional representatives had received a barrage of calls organized by Wall Street lobbyists and pro-business groups such as the Chamber of Commerce and others with a vested interest in getting Congress to approve the bill despite its obvious deficits (e.g. the absence of any direct measures to help homeowners).

In this case, coordinated business interests were able to offset and marginalize the will of the people (although some citizens changed their negative opinions about the bill when they saw the stock market drop precipitously following its initial defeat, polls show that a majority of Americans were still against the bill as drafted by the end of the week).

Having worked on Capitol Hill for a number of years, I have personally observed instances of corporate lobbyists subverting the intent of our democratic institutions by applying undue influence in the political process. For example, I have seen bills shaped by corporate interests passed into law without much or any input from average citizens or organizations representing the public will. Most of these measures have passed without much public attention due to the complexity of the issue and relative obscurity of the process.

The content and implementation of the Wall Street Bailout bill should reveal to Americans the full extent to which corporate interests have taken over the functions and management of the U.S. government. The bill has given unprecedented authority to the U.S. Treasury Secretary, Henry "Hank" Paulson, Jr.--himself a former Chairman and CEO of the Wall Street investment firm Goldman Sachs.

Secretary Paulson is now tasked with turning over a large amount of the $750 billion promised in the bill to be managed by his friends in the industry. As the New York Times reported on Friday, October 3:

"Treasury officials do not plan to manage the mortgage assets on their own. Instead, they will outsource nearly all of the work to professionals, who will oversee huge portfolios of bonds and other securities for a management fee.

...Mr. Paulson has recruited several former colleagues from Goldman Sachs to advise him...

...The government will...outsource the bulk of the program to 5 to 10 asset management firms.

...The selected asset management firms will receive a chunk of the $250 billion that Congress is allowing the Treasury to spend in the first phase of the bailout.

... Administration officials said they would try to drive down fees with a competitive bidding process. But with $700 billion to disburse, the plan could still generate tens of billions of dollars in fees if the firms negotiate anywhere close to their standard fees."

The article goes on to say that with so many Wall Street professionals now out of work, the U.S. government will have plenty of experts available to help it implement the bailout plan.

Instead of help for homeowners in danger of losing their homes, Americans now learn that the Wall Street Bailout bill is really a boondoggle for the same Wall Street "professionals" who messed up so badly with the creation and proliferation of the subversive financial products and processes (e.g. subprime mortgages, mortgage-backed securities and credit default swaps) that have gotten this country into its current mess.

This is not government "for the people, by the people." It is government for monied interests and by monied interests.