By Dave Lindorff

For years, advocates of open government, mostly on the left, but
also on the right, have railed against the growing secrecy of the US
government. But the focus, particularly of left critics, has been on
the Intelligence budget, a $40+ billion “black box” that is completely
protected from public and even congressional scrutiny, and on large
swaths of the Pentagon budget, which are kept hidden allegedly for
“national security” reasons.

For the most part, the American public has adopted an ovine
attitude towards such secrecy, assuming that the “government knows
best.”

Now, however, with the economic crisis, and the collapse of AIG,
Citibank, Bank of America, Merrill Lynch, Bear Stearns, Lehman
Brothers, General Motors, Chrysler and other leading US firms, and with
bailouts that are putting taxpayers on the hook to the tune of
trillions of dollars, the people are waking up, or at least are
starting to get restless in their slumber.

Perhaps there will be a new awareness soon of the importance of transparency in all parts of government.

For now, the Obama administration, the Federal Reserve and Congress
are all trying desperately to ease the citizenry back into a state of
torpor by adopting a position of mock outrage at the $135 million in
bonuses paid out by AIG to the very employees who created the
disastrous and crooked Credit Default Swap market that precipitated the
global economic collapse.

What they don’t want to happen is for people to start thinking
about the $183 billion that Congress and the Fed approved for AIG,
which we now have learned was simply a devious scheme for passing more
money in secret through to troubled banks and investment banks – among
them Citigroup, Bank of America, Goldman Sachs, Morgan Stanley and
others – that had bought these CDOs.

Recall that back in September, when the crisis first hit in earnest
and Treasury Secretary Henry Paulson first called for a bailout
program, he asked—in a three-page proposal to Congress which he
insisted they must pass or risk total economic collapse and the
imposition of martial law!—for absolute authority as Treasury Secretary
to hand out the $700 billion and for protection against any legal
action for whatever he might choose to do with it.

Congress didn’t accede to his imperious request, though it did give
him half the money he wanted: $350 billion, saying it would provide the
second $350 billion later (the new Congress did hand the second half of
the money over just before President Obama took office). A sizeable
chunk of that huge sum of taxpayer money went to AIG, the giant
insurance company that had devised a scheme to sell “insurance” for the
mortgage-backed securities that banks were gorging on. The term
insurance has to be placed in quotes, because since these contracts
were not backed by any assets, they were really not insurance at all.

As rumors spread that much of the so-called Troubled Assets Relief
Program (TARP) money that was provided to AIG was actually passed
through to banks and investment banks that were already receiving TARP
funds directly (including nearly $50 billion to foreign institutions),
Congress and some news organizations, notably Bloomberg, sought to
learn what firms were actually receiving the cash. AIG, the Treasury
Department and the Bush and later the Obama administration initially
fought such disclosure, as did all the bank recipients, claiming that
releasing the names of the recipients would make investors doubt their
stability.

Finally, thanks to the efforts of New York State Attorney General
Andrew Cuomo, whose office has been pursuing the issue in the courts,
we have the answer: the money was going primarily to the nation’s
biggest banks.

But most troubling is that a disproportionate amount of the AIG
bailout money--$13 billion -- went to Goldman Sachs, a company that
until July 2006 was headed by Treasury Secretary Paulson himself. No
wonder Paulson, AIG, Goldman Sachs and others wanted to keep this all
under wraps. No wonder too that Paulson initially tried to get Congress
to immunize him from the legal consequences of his bailout actions.

The truth is that Goldman Sachs and Paulson should be prosecuted
for corruption. The deal that Paulson engineered in secret for
shoveling taxpayer money into his former firm is surely one of the
largest acts of official larceny of public funds in the history of the
country.

Goldman Sachs even publicly announced in early February that it was
returning $10 billion in TARP funds it had received last fall, saying
it didn’t need the money. Well sure the company didn’t need the
money—because it was getting even more in secret via the AIG conduit.

With this backdrop, the rest of the bailout might well be seen as a
hugely expensive cover: give enough money to the rest of the big banks
and investment banks, and nobody in the industry will squeal about the
sweet deal Goldman Sachs was getting.

Of course, the corruption goes much deeper. While public money was
being funneled into the banks and other financial institutions, those
same institutions were using some of this taxpayer largesse to lobby
Congress to do even more. Just between October 1 and the end of 2008,
18 recipients of TARP funds reported spending nearly $15 million on
lobbying efforts in Washington. Among the biggest
bailout-recipient/lobbyists: American Express ($1.1 million), AIG ($1.1
million), B of A ($$880,000), Citigroup ($1.5 million), Goldman Sachs
($720,000), JPMorgan Chase ($1.1 million), Wells Fargo ($580,000).
These amounts represent quite an investment considering that these
firms all received, in return for their TARP lobbying efforts, billions
of dollars in bailout money.

Remember, Paulson’s original plan was to have even the TARP direct
bailout grants kept secret from the public. That idea didn’t fly. But
many of these companies that used their public funds to lobby for more
public funds also received secret bonus bailouts via AIG.

So here’s what happens when you have secret government. The public gets royally shafted.

Now that the story is coming out, the crooks in Congress, the White
House and at Treasury and the Fed are desperately trying to lull us all
back to sleep by feigning anger at the relatively paltry sums AIG is
handing out in bonuses to some of the crooks and scheisters on its
staff.

We should not put our heads down on the pillow being offered, though.

The lesson here is that we need open government, and that we need
to demand that our media not go for the cheap and easy story being
handed out by government press release.

Also, there’s this last thought: If you thought that the banking
mess was a horrible rip-off, just try to imagine what level of
corruption there must be in the Pentagon and the Intelligence programs
that have been operating in absolute secrecy and with no scrutiny for
decades!

Baa-a-a-a-a-a-a.
_________________
DAVE LINDORFF is a Philadelphia-based journalist. His latest book
is “The Case for Impeachment” (St. Martin’s Press, 2006 and now
available in paperback edition). His work is available at www.thiscantbehappening.net