By Dr. Susmit Kumar (IAS)

As per a Niti Aayog proposal, 50 specialists from the Indian private sector are to be inducted in government departments at the level of director and joint secretary (Government to open lateral entry door for private sector specialists, The Economics Times/PTI, July 23, 2017).

This will be a disaster for India because the ultimate allegiance of those people would be the private sector and not the government or the common people. They will work for a fixed tenure only, say for 2-3 years in the government and thereafter they are off to cushioned jobs in private sector. Hence while working in the government, their decisions will be more pro-private sector than for the common people. There is no dearth of brilliant people in senior government jobs in India because officers like of IAS (Indian Administrative Service) are the top brains in India due to the hard selection processes.

In the US, these same people are virtually looting the taxpayers’ money. Here is an example:

There is a revolving door between the Wall Street and the financial organs, like the Treasury Department, of the US administration. I.e. in nearly all US administrations, Wall Street bankers hold the top positions of the government’s financial organs and after the end of their term they again join the Wall Street. Hence, their allegiance is with Wall Street and not with the common people of the US.

One major criticism of the $700 billion bailout, at the onset of 2008 Great Recession by the Bush administration, was that all the Wall Street financial institutions were paid in full. Societe Generale received $16.5 billion in payments, Goldman Sachs $14 billion, Deutsche Bank $8.5 billion, Merrill Lynch received $6.2 billion, and another 12 institutions received a total of $16.9 billion for full value of their credit-default swaps with American International Group (AIG) that was certain to go bankrupt without the bailout. On the other hand, had AIG been allowed to go bankrupt, the Wall Street bankers would not have had received even a single cent (Watchdog: Fed Used Flawed Strategy in AIG Bailout, abcnews.go.com, November, 16, 2009).

Generally, in a bankruptcy the loaners are not paid the full amount they had loaned, i.e. they get “a haircut”. It is worth noting that the then US Treasury Secretary, Henry Paulson blackmailed Bush Jr, then US President and the US Congress for the $700 billion bailout by saying that the US might not have any economy the following day. He was the CEO of Goldman Sachs, a Wall Street financial firm, before becoming the US Treasury Secretary.

Here is the quote from an article , “Secrets and Lies of the Bailout,” The Rolling Stone, January 4, 2013:

“Much as with a declaration of war, a similarly extreme and expensive commitment of public resources, Paulson needed at least a film of congressional approval. And much like the Iraq War resolution, which was only secured after George W. Bush ludicrously warned that Saddam was planning to send drones to spray poison over New York City, the bailouts were pushed through Congress with a series of threats and promises that ranged from the merely ridiculous to the outright deceptive. At one meeting to discuss the original bailout bill – at 11 a.m. on September 18th, 2008 – Paulson actually told members of Congress that $5.5 trillion in wealth would disappear by 2 p.m. that day unless the government took immediate action, and that the world economy would collapse ‘within 24 hours’.”

To be fair, Paulson started out by trying to tell the truth in his own ham-headed, narcissistic way. His first TARP proposal was a three-page absurdity pulled straight from a Beavis and Butt-Head episode – it was basically Paulson saying, “Can you, like, give me some money?” Sen. Sherrod Brown, a Democrat from Ohio, remembers a call with Paulson and Federal Reserve chairman Ben Bernanke. “We need $700 billion,” they told Brown, “and we need it in three days.” What’s more, the plan stipulated, Paulson could spend the money however he pleased, without review “by any court of law or any administrative agency.”

The White House and leaders of both parties actually agreed to this preposterous document, but it died in the House when 95 Democrats lined up against it. For an all-too-rare moment during the Bush administration, something resembling sanity prevailed in Washington.

So Paulson came up with a more convincing lie. On paper, the Emergency Economic Stabilization Act of 2008 was simple: Treasury would buy $700 billion of troubled mortgages from the banks and then modify them to help struggling homeowners. Section 109 of the act, in fact, specifically empowered the Treasury secretary to “facilitate loan modifications to prevent avoidable foreclosures.” With that promise on the table, wary Democrats finally approved the bailout on October 3rd, 2008. “That provision,” says Barofsky, “is what got the bill passed.”

But within days of passage, the Fed and the Treasury unilaterally decided to abandon the planned purchase of toxic assets in favor of direct injections of billions in cash into companies like Goldman and Citigroup. Overnight, Section 109 was unceremoniously ditched, and what was pitched as a bailout of both banks and homeowners instantly became a bank-only operation – marking the first in a long series of moves in which bailout officials either casually ignored or openly defied their own promises with regard to TARP.

Congress was furious. “We’ve been lied to,” fumed Rep. David Scott, a Democrat from Georgia. Rep. Elijah Cummings, a Democrat from Maryland, raged at transparently douchey TARP administrator (and Goldman banker) Neel Kashkari, calling him a “chump” for the banks. And the anger was bipartisan: Republican senators David Vitter of Louisiana and James Inhofe of Oklahoma were so mad about the unilateral changes and lack of oversight that they sponsored a bill in January 2009 to cancel the remaining $350 billion of TARP.

About Dr. Susmit Kumar
Dr. Susmit Kumar obtained his Ph.D. from Pennsylvania State University, US. Before coming to the United States, he was selected in the prestigious India Administrative Service (IAS) and did its training at the Lal Bahadur Shastri National Academy of Administration (LBSNAA), Mussoorie, India (August 1985-March 1986). He is author of books - "Casino Capitalism" (iUniverse, 2012), "Modernization of Islam and Creation of A Multipolar World Order" (Booksurge, 2008) and "Karma, Mind and Quest for Happiness" (iUniverse, 2012) and "India is a Country, not a Company - How Anglo-US 'Imported' Economists Misled and Mismanaged the Indian Economy" (2018).