Corporate Corruption News Stories

Excerpts of Key Corporate Corruption News Stories in Major Media

Below are key excerpts of revealing news articles on corporate corruption from reliable news media sources. If any link fails to function, a paywall blocks full access, or the article is no longer available, try these digital tools.

Note: This comprehensive list of news stories is usually updated once a week. Explore our full index to revealing excerpts of key major media news stories on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.

In a sweeping critique ... an expert panel of the National Research Council said the federal government was not doing enough to identify potential health and environmental risks from engineered nanomaterials. Nanomaterials are engineered on the scale of a billionth of a meter, perhaps 1/10,000 the width of a human hair. They are turning up in a range of items including consumer products like toothpaste and tennis rackets and industrial products like degreasers or adhesives. But some experts say they may pose health or environmental risks. For example, researchers in Scotland reported this year that carbon nanotubes may pose the same health risks as asbestos. “Industry wants to run with it,” said Andrew D. Maynard, chief science adviser to the Project on Emerging Nanotechnologies at the Woodrow Wilson Institute, who was the chairman of the panel. But he added, “one of the big barriers at the moment is understanding how to use it safely.” The panel analyzed the risk research strategy of the National Nanotechnology Initiative, the program to coordinate federal efforts in nanotechnology research and development. Its report concluded that the initiative’s strategy “does not present a vision, contain a clear set of goals, have a plan of action for how the goals are to be achieved, or describe mechanisms to review and evaluate funded research and assess whether progress has been achieved.” An informal coalition of environmental and business organizations praised the report, saying that for three years they had been urging the federal government to do more to assess potential health and environmental effects of nanomaterials.

Note: For many important articles on health issues from reliable sources, click here.

Outraged and determined Chicago factory workers who were abruptly laid off this week have occupied their former workplace and say they won't leave until they get the severance and vacation pay they say they're owed. The employees say they received three days notice their plant was closing. In the second day of a sit-in on the factory floor Saturday, about 250 union workers occupied the building in shifts while union leaders outside criticized a Wall Street bailout they say is leaving laborers behind. Leah Fried, an organizer with the United Electrical Workers, said the Chicago-based vinyl window manufacturer failed to give its 300 employees the 60 days' notice required by law before shutting. She said the company can't pay employees because its creditor, Charlotte, N.C.-based Bank of America, won't let them. Bank of America received $25 billion from the government's financial bailout package. The company said in a statement to news outlets Saturday that it isn't responsible for Republic's financial obligations to its employees. "Across cultures, religions, union and nonunion, we all say this bailout was a shame," said Richard Berg, president of Teamsters Local 743. "If this bailout should go to anything, it should go to the workers of this country." Outside the plant, protesters wore stickers and carried signs that said, "You got bailed out, we got sold out."

Note: For many revealing reports on the Wall Street bailout from major media sources, click here.

I spent Sunday afternoon brooding over a [New York Times] front-page article, entitled ["Citigroup Saw No Red Flags Even as It Made Bolder Bets”]. In searing detail it exposed ... how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics. So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so. Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including ...the former Treasury Secretary Robert Rubin, were ... so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it. These are the people whom taxpayers bailed out on Monday to the tune of what could be more than $300 billion.

Note: For many revealing reports on the Wall Street bailout from major media sources, click here.

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents. "Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job. Bowing to aggressive lobbying - along with assurances from banks that the troubled mortgages were OK - regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way. The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s. Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Those proposals all were stripped from the final rules.

Note: For many revealing reports on the Wall Street bailout from reliable sources, click here.

The Bush administration has failed to adequately oversee its $700 billion bailout program and must move rapidly to guarantee that banks are complying with the plan's limits on conflicts of interest and lavish executive compensation, congressional investigators said yesterday. The new report by the Government Accountability Office, the nonpartisan investigative arm of Congress, said the Treasury Department has yet to impose necessary safeguards or decide how to determine whether the program is achieving its goals. The auditors said it was too soon for them to tell whether the bailout was working. "The rapid pace of implementation and evolving nature of the program have hampered efforts to put a comprehensive system of internal control in place," the report said. "Until such a system is fully developed and implemented, there is heightened risk that the interests of the government and taxpayers may not be adequately protected and that the program objectives may not be achieved in an efficient and effective manner." So far, the rescue package has provided at least $150 billion in capital infusions to 52 financial institutions, the auditors said. They added that no applications for funding were denied by the Treasury. The congressional auditors urged Treasury officials to determine how each bank receiving bailout money is using the money and whether they are using it in a way consistent with the intent of the law. Several congressional leaders have criticized financial firms for hoarding the money instead of using it to lend to borrowers.

Note: For many revealing reports on the Wall Street bailout from reliable sources, click here.

With its decision last week to pump an additional $1 trillion into the financial crisis, the government eliminated any doubt that [it has] no hesitation in pledging to spend previously almost unimaginable sums of money and running up federal budget deficits on a scale not seen since World War II. Indeed, analysts warn that the nation's next financial crisis could come from the staggering cost of battling the current one. Just last week, new initiatives added $600 billion to lower mortgage rates, $200 billion to stimulate consumer loans and nearly $300 billion to steady Citigroup, the banking conglomerate. That pushed the potential long-term cost of the government's varied economic rescue initiatives, including direct loans and loan guarantees, to an estimated total of $8.5 trillion -- half of the entire economic output of the U.S. this year. The spending already has had a dramatic effect on the federal budget deficit, which soared to a record $455 billion last year and began the 2009 fiscal year with an amazing $237-billion deficit for October alone. Analysts say next year's budget deficit could easily bust the $1-trillion barrier. "I didn't think we'd see that for a long time," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "There's a huge risk of another economic crisis, a debt crisis, once we get on the other side of this one." Once the financial crisis eases, higher interest rates and soaring inflation will be risks.

Note: For many revealing reports on the Wall Street bailout from reliable sources, click here.

The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said. The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted. "In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent." Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults. A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said. Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said. "We are now beginning to see evidence of broad-based declines in overall consumer liquidity. Already, we have witnessed the entire mortgage market hit a wall, and we believe it will, for the first time ever, show actual shrinkage over the next few months," she wrote. "In a country that offers hundreds of cereal and soda pop choices, the banking industry has become one that offers very few choices", Whitney wrote in a note dated November 30. "Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said.

Note: This article, in pointing out that the banking industry offers few choices for consumers, fails to mention that the industry is rapidly becoming extremely concentrated, with major bank failures and takeovers accelerating due to the financial crisis on Wall Street. And the bailout from the Fed and Treasury has encouraged this concentration through huge tax breaks and risk protections. For many revealing reports on the Wall Street bailout from reliable sources, click here.

The credit bubble has burst. The economy is tanking. Investors in the U.S. stock market have lost more than $9 trillion since its peak a year ago. But in industries at the center of the crisis, plenty of top officials managed to emerge with substantial fortunes. Fifteen corporate chieftains of large home-building and financial-services firms each reaped more than $100 million in cash compensation and proceeds from stock sales during the past five years, according to a Wall Street Journal analysis. Four of those executives, including the heads of Lehman Brothers Holdings Inc. and Bear Stearns Cos., ran companies that have filed for bankruptcy protection or seen their share prices fall more than 90% from their peak. The study ... showed that top executives and directors of the firms cashed out a total of more than $21 billion during the period. The issue of compensation and other rewards for corporate executives is front-and-center in the wake of the financial meltdown. In the tech bubble of the late 1990s, more than 50 individuals each made more than $100 million from selling shares just prior to the crash. Many had just founded companies that had never turned a profit. "The system tends to reward people for participating in bubbles," says Roy C. Smith, a finance professor at New York University's business school.

Note: For many revealing reports on the Wall Street bailout from reliable sources, click here.

The government's financial bailout will be the most expensive single expenditure in American history, potentially costing around $7.5 trillion -- or half the value of all the goods and services produced in the United States last year. In comparison, the total U.S. cost of World War II adjusted for inflation was $3.6 trillion. The bailout will cost more than the total combined costs in today's dollars of the Marshall Plan, the Louisiana Purchase, the Korean War, the Vietnam War and the entire historical budget of NASA, including the moon landing, according to data compiled by Bianco Research. It remains to be seen whether the government's multipronged approach to bail out banks, stimulate spending and buy up mortgages will revive the economy, but as the tab continues to grow so does concern over where the government will find the money. Monday the government guaranteed an additional $306 billion to bail out Citigroup, and today Treasury Secretary Henry Paulson pledged $800 billion to make credit more available to consumers and small businesses, and to buy up mortgages from Fannie Mae and Freddie Mac. Congress last month allocated $700 billion for an emergency bailout of some of Wall Street's most storied firms by purchasing their troubled assets. The funds allocated through the Troubled Assets Relief Program are but a small part of the government's overall bailout spending. Bailout programs also include a Federal Reserve plan to buy as much as $2.4 trillion in short-term notes called commercial paper that began Oct. 27, and an FDIC plan to spend $1.4 trillion to guarantee bank-to-bank loans that commenced Oct. 14, according to Bloomberg News, which first compiled the total cost of the bailout.

Note: $7.5 trillion amounts to about $25,000 for every person in the U.S. What's going on here? For many revealing reports on the realities of the Wall Street bailout, click here.

For a few months this summer, the oil market speculator ... helped push oil prices steadily higher, shattering records that had lasted for decades. As oil topped $145 per barrel, Congress started looking for ways to rein the speculators in. Then oil prices plunged, and interest in the issue fizzled. But that may soon change. "This will remain an issue," said Sen. Byron Dorgan, D-N.D., who introduced oil market legislation this year. "Because when the price of oil has gone from $50 to $147 and back, it's clear to me and everyone else that this has nothing to do with supply and demand. It has to do with speculation." Among possible changes, Congress may try to assert more authority over unregulated oil swaps that don't take place on any formal market. Many factors helped shove prices higher, including the growth of China's economy and the decline of the American dollar. But oil kept rising even as gasoline sales fell in the United States, the world's largest oil consumer. That wouldn't have happened if supply and demand really were driving the market, many analysts say. "The entire move from $70 (per barrel) to $147 was people fleeing the dollar and looking at oil as an asset class," said Amy Myers Jaffe, an energy research fellow at Rice University's Baker Institute. "It was speculators, so when they exited the market, we went right back to $70." Speculators are investors who trade in oil or other commodities strictly as a financial investment. They include hedge funds and investment banks as well as retirement funds.

Note: For lots more reports on corporate corruption from reliable sources, click here.

The bailouts keep coming, and they seem to be getting worse for taxpayers. The deal worked out over the weekend to prevent the collapse of Citigroup "is a terrible deal for taxpayers," says Campbell Harvey, a Duke University global finance professor. "Some intervention was necessary. But the terms of the intervention basically shafted the U.S. taxpayer." Under the deal, the U.S. government will invest $20 billion in Citigroup preferred stock (on top of its previous $25 billion capital injection from the Troubled Asset Relief Program) and guarantee up to $306 billion in mortgage and other assets. Citigroup would absorb the first $29 billion in losses on that asset pool. Losses exceeding $29 billion would be shared 90 percent by the government and 10 percent by Citigroup. What do taxpayers get for taking on this risk? Citigroup will pay an 8 percent dividend on the preferred stock or $560 million a year. By comparison, when Warren Buffett's Berkshire Hathaway recently invested $5 billion in Goldman Sachs and $3 billion in General Electric, it got preferred stock that pays a 10 percent dividend. The government also gets warrants to purchase about $2.7 billion worth of Citigroup common stock at $10.61 per share. Citigroup's shares closed at $5.95 per share Monday, up $2.18 from Friday. For the warrants to become profitable, the common shares would have to nearly double.

Note: The answer to the question of what taxpayers get should be essentially nothing. Only Citigroup shareholders will see the benefits mentioned, and very few taxpayers are shareholders. Money is being thrown around like never before. For many revealing reports on the realities of the Wall Street bailout, click here.

The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis. When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in. “Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

Note: How is it possible that trillions of taxpayer dollars are being thrown around, yet Congress is not being told where the money is going? For revealing information on how the Fed manipulates government, click here.

Henry Paulson's speech Wednesday made it pretty clear: The Treasury secretary has seized control of the financial system. "He is absolutely the most powerful person in the country. Maybe the world," says Wall Street accounting expert Robert Willens. The most telling line in his speech came when Paulson was explaining why he did a 180-degree turn with money approved by Congress under the $700 billion bailout bill. Instead of using it to buy troubled mortgage assets from banks, as clearly envisioned, he scrapped that idea and used it to make equity investments in banks. "In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks," he said. If Paulson bothered consulting with President Bush, he didn't mention it. In fact, he didn't even mention the president until the tail end of his speech, when he talked about the global summit Bush is hosting this weekend. I can understand why Paulson wants to distance himself from an unpopular president, especially one who has little facility for complex financial matters. But Bush is [the] president and even President-elect Barack Obama knows there can be only one president at a time. And his last name is not Paulson. In September, when Paulson asked for a $700 billion blank check from Congress to fix the financial markets, he got a lot of blowback. By the time Congress was done with his proposal, it had grown from 2 1/2 pages to more than 450. Yet it now appears that Paulson got the blank check he wanted.

Note: Why doesn't Congress have some say in what is done with this $700 billion? That's over $3,000 for every taxpayer in the U.S. which is being spent with practically no accountability. Is this what democracy looks like? For many key articles revealing the hidden realities of the bailout, click here.

So you thought Barack Obama's victory signaled the death of Reaganomics? Wrong, wrong: Reaganomics is very much alive. In a subtle, bloodless coup, the Reaganomics ideology magically pulled victory out of the jaws of defeat in the meltdown. The magic happened fast and quietly, in the shadows, while you were in a trance, distracted by the election drama. Recently Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism, framed the issue perfectly: "Has the Treasury partially nationalized the private banks, as we have been told? Or is it the other way around?" The question was rhetorical, the answer painfully clear. In a few weeks Wall Street did the old bait and switch, emerging from an economic and market disaster with new powers, in total control of America. And thanks to Treasury Secretary Henry Paulson's brilliant bailout coup, Reaganomics is now the new "sleeper cell" quietly hidden inside the Obama White House and America's Treasury, where it will be for a long time to come. Listen closely folks: You and your government are and will continue being conned out of trillions. Klein further exposed this insanity in a recent Rolling Stone article, "The New Trough: The Wall Street bailout looks a lot like Iraq, a 'free-fraud zone' where private contractors cash in on the mess they helped create." Paulson's privatization, outsourcing and management of the $700 billion bailout has the exact same Reaganomics ideological, strategic and deceptive footprints that President George W. Bush and former Defense Secretary Donald Rumsfeld used to privatize, outsource and mismanage the costly Iraq War blunder.

Note: For the powerfully revealing article by Naomi Klein mentioned in the article above, click here. Speaking on Tulsa Oklahoma’s 1170 KFAQ, Senator James Inhofe of Oklahoma (Republican) has revealed that Treasury Secretary Henry Paulson was the source of the threat of martial law in the US if the $700 billion bailout bill was not passed that was exposed on the House floor by Rep. Brad Sherman. For many key articles revealing the hidden realities of the bailout, click here.

Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track. CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved. Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources. Not only is it an astronomical amount of money, it's a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and news releases. Strictly speaking, not every cent is a direct result of what's called the financial crisis, but it is arguably related to it. Some 68-percent of the sum falls under the Federal Reserve's umbrella, while another 16 percent is the under the Troubled Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October. The TARP alone is bigger than virtually any other US government endeavor dating back to the Louisiana Purchase.

Note: That's over $10,000 per man, woman, and child in the U.S. Click on the link above to view a highly informative slideshow, the "Biggest Budget Items in US History," comparing the Wall Street bailout to famous historic government expenditures, and a chart, the "Financial Crisis Balance Sheet," detailing the many components of the bailout. For many key articles revealing the hidden realities of the bailout, click here.

The more details emerge, the clearer it becomes that Washington's handling of the Wall Street bail-out is not merely incompetent: it is borderline criminal. In a moment of high panic in September, the US treasury pushed through a radical change in how bank mergers are taxed - a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140bn in tax revenue, legislators found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that "[the] treasury had no authority to issue the [tax change] notice". Of equally dubious legality are the equity deals the treasury has negotiated with many of the banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals: "Any use of these funds for any purpose other than lending - for bonuses, for severance pay, for dividends, for acquisitions of other institutions ... is a violation of the act." Yet this is exactly how the funds are being used. Then there is the nearly $2 trillion that America's central bank, the Federal Reserve, has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg news service believes this secrecy violates the law and has filed a federal suit demanding full disclosure. Yet the Democrats are either openly defending the administration or refusing to intervene. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth.

Note: For many key articles revealing the hidden realities of the bailout, click here.

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye. Unbeknownst to almost all of Washington and the financial world, Bush and every other President since Jimmy Carter have had the authority to exempt companies working on certain top-secret defense projects from portions of the 1934 Securities Exchange Act. Administration officials told BusinessWeek that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office. It couldn't be immediately determined whether any company has received a waiver under this provision. The timing of Bush's move is intriguing. On the same day the President signed the memo, Porter Goss resigned as director of the Central Intelligence Agency. Only six days later ... USA Today reported that the National Security Agency had obtained millions of calling records of ordinary citizens provided by three major U.S. phone companies. Negroponte oversees both the CIA and NSA in his role as the administration's top intelligence official. In addition to refusing to explain why Bush decided to delegate this authority to Negroponte, the White House declined to say whether Bush or any other President has ever exercised the authority and allowed a company to avoid standard securities disclosure and accounting requirements.

Note: For many revealing reports on government secrecy from major media sources, click here.

Some of the nation's biggest banks are in for a windfall – on top of the $700 billion government bailout – thanks to a new tax policy quietly issued by the Treasury Department. The notice gives big tax breaks to companies that acquire struggling banks hit hard by the mortgage crisis. In some cases, the tax breaks could exceed the cost of acquiring the banks, according to analyses by private tax experts. The change could cost the Treasury as much as $140 billion by enabling firms that acquire struggling banks to use more losses incurred by those banks to offset their own taxable profits. San Francisco's Wells Fargo & Co., which made a bid to acquire Wachovia Corp. just days after the notice was issued, stands to reap about $20 billion in additional tax savings because of the change, according to the analyses. Wells Fargo paid $14.8 billion in a stock deal to buy Wachovia. The notice was issued Sept. 30 as Congress debated the $700 billion bailout plan. Some members of Congress are upset that such a sweeping tax change was issued with no public hearings or congressional input. "I am concerned that the notice, which was never debated by Congress, could end up costing taxpayers tens of billions of more dollars on top of the hundreds of billions of dollars already approved by Congress in the financial rescue plan," Sen. Chuck Schumer, D-N.Y., said in a letter last week to Treasury Secretary Henry Paulson. Some tax lawyers questioned the legality of the notice. Before the notice was issued, the merged bank could write off only a limited amount of the losses. The notice removed those restrictions, enabling the acquiring banks to make huge reductions in their tax liabilities.

Note: With no limitations placed on the nine biggest banks receiving many billions of dollars in bailout money, they are free to buy up smaller banks. And they will likely receive huge tax breaks, sometimes even greater than the purchase price, for doing so! For many revealing, reliable reports on the Wall Street bailout, click here.

Having been handed vast authority and almost no restrictions in the bailout law that Congress passed ... a committee of five little-known government officials, aided by a bare-bones staff of 40, is picking winners and losers among thousands of banks, savings and loans, insurers and other institutions. It is new and unfamiliar terrain for the officials, who are making monumental decisions — a form of industrial policy, some critics say — that contradict the free market philosophy they usually espouse. Predictably, the process is stirring alarm from Capitol Hill to Wall Street. Among the problems, critics say, is that despite earlier promises of transparency, the process is shrouded in secrecy, its precise goals opaque. Treasury officials have refused to disclose their criteria for deciding which banks ... get money. And officials have yet to say they even have a broader strategy, though banking executives are convinced the government wants to encourage acquisitions. Already, critics from Capitol Hill to Wall Street are lashing out at the program, saying the banks are misusing the capital infusions by hoarding the money rather than lending it. The government, the critics say, is wrongly steering funds to banks to take over weaker rivals. All this comes after Mr. Paulson abruptly shifted the focus of the program to injecting capital rather than buying distressed mortgage-related assets from the banks. This meant that Congress had never debated the details of how the government ought to carry out a recapitalization.

Note: With the intense secrecy and all of the lobbyist and big guns for banking fighting for hundreds of billions of dollars given practically free by the government, do you really think these "five little-known government officials" will be impartial in their decisions? For many revealing, reliable reports on the Wall Street bailout, click here.

Secretary Paulson [has been] described as playing the role of the Godfather, making the banks [a bailout] offer they could not refuse. But in one important respect, he was more Santa Claus than Vito Corleone: the agreement allowed the banks to continue paying dividends to common shareholders. These dividends, if they are paid at current levels, will redirect more than $25 billion of the $125 billion to shareholders in the next year alone. A significant fraction of [the bailout] money will wind up in shareholders’ pockets — and thus be unavailable to plug the large capital hole on the banks’ balance sheets. The officers and directors of the nine banks will be among the leading beneficiaries of the dividend payout. Their personal take of the dividends will amount to approximately $250 million in the first year. Why would the banks want to maintain large dividend payouts when they’ve had such a hard time borrowing, are starved of cash, and the credit markets believe that they run a significant risk of defaulting? Shouldn’t these distressed banks be marshalling all of the financial resources available to them to ensure their viability? Here’s why: Each dollar paid out as a dividend today is a dollar that cannot be seized by creditors in the event of bankruptcy. For a distressed company, dividends are not in the interest of the enterprise as a whole (shareholders and lenders taken together), but only in the interest of shareholders. They are an attempt by shareholders to beat creditors out the door. The government should close the door by putting an immediate stop to the dividend payouts of any banks receiving direct federal support.

Note: Is the fox guarding the hen house? For many revealing, reliable reports on the banking bailout, click here.

Important Note: Explore our full index to revealing excerpts of key major media news stories on several dozen engaging topics. And don't miss amazing excerpts from 20 of the most revealing news articles ever published.