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At UN, Stiglitz Slams Chase For Misuse of Bailout, Federal Reserve for Predatory Lending

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, October 30 -- The $700 billion bank bailout should not be used for mergers to increase market share, economist Joseph Stiglitz told the Press on Thursday. Following a UN panel discussion about the global financial crisis, Inner City Press asked Stiglitz about predatory lending and, as an aside, if he would consider the post of Secretary of the Treasury. While not directly answering the latter, Stiglitz said that the current Secretary, Henry Paulson, is ignoring the Congressional intent of the bailout and is allowing the funds to be misused by the banks.

  Stiglitz specifically cited a conference call by JPMorgan Chase, in which an executive bragged that the $25 billion it is claiming from the bailout will make Chase "more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment." Stiglitz called that an abuse, and also took a jab at the Federal Reserve, which he said had the power to crack down on predatory lending since 1994 but did not. Video here, from Minute 19:31.


Stiglitz at UN prior to meltdown and bailout, One Laptop Per Child not shown

  Flanking  Stiglitz at the press conference were Belgian sociologist Francois Houtart -- who spoke against the "logic of capital accumulation" -- and General Assembly President Miguel d'Escoto Brockmann, to whom Stiglitz and Houtart are two of 15 special senior advisers. The other advisers include Slobodan Miosevic's lawyer Ramsey Clark and Noam Chomsky, who has denounced the UN for, among other things, supporting Indonesia's invasion of East Timor (Failed States, page 87).

  Father d'Escoto, a former Sandinista foreign minister of Nicaragua, spoke last and equated the United States' blocking of economic reforms with its "dilatory tactics" against attempts to end apartheid.

  Afterwards, Inner City Press asked Stiglitz about the International Monetary Fund's predatory lending. Stiglitz said that the IMF has made its money of late from lending to countries in crisis, and thus has an incentive for their to be crises. He said that countries like Mexico, rather than going to the IMF, may seek capital from China, which has $1.9 trillion available, Stiglitz said, or Japan or India. He didn't mention the scandals surrounding IMF chief Strauss-Kahn. "There'll be a new President on January 20," he said, then was gone.

Footnote: a last minute addition to the panel was economist Calestous Juma, who close Inner City Press readers may remember as declining to characterize Ban Ki-moon's consolidation of the Office of the Special Advisor on Africa with another post, while encouraging Inner City Press to keep reporting on it. We have -- click here for a recent story about conflicts of interest and corporate entree by Microsoft into the UN -- but were glad to see Juma in the Trusteeship Council chamber speaking about economic diplomacy, using a green and white "One Laptop Per Child" computer. We note in closing that Microsoft, among others, problematized the idea of a $100 computer. Oh, intellectual property and corporate abuse.

Watch this site, and this Oct. 2 debate, on UN, bailout, MDGs

and this October 17 debate, on Security Council and Obama and the UN.

* * *

These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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