U.S. to Bailout the Central Bank of Afghanistan

Saturday, September 4, 2010

The New York Times on Saturday reports a deal between the U.S. and Afghanistan to bailout Afghanistan’s largest bank, Kabul Bank, after frantic depositors mobbed the bank for a third day to make withdrawals.

Particulars of the deal are contradictory at best.

Anticipating a backlash from Americans outraged over news the U.S. is bailing out a foreign bank, Jenni LeCompte, a Treasury Department spokeswoman said no U.S funds were involved in the bailout.

But the plan calls for an injection of cash into the beleaguered Kabul Bank meant to slow the run on the bank by customers who have withdrawn more than $200 million in the past few days amid fears of a wider economic collapse.

The Treasury Department claims to be only advising the Afghan government on how to manage the crisis — even sending a team of experts to Kabul. But it remains unclear what the source is for the infusion of cash into the Afghan financial system.

If we learn the funds used to bailout Afghanistan come from the American taxpayer, the Obama administration could find itself facing an unprecedented constitutional crisis.

This entry was posted in Afghanistan, International News, News, Obama Administration, USA and tagged , , , , . Bookmark the permalink.

24 Responses to U.S. to Bailout the Central Bank of Afghanistan

  1. retahyajyajav says:

    I’ve heard everything now.

    We’re bailing out a bank where one of the Karzai brothers is a principle owner? Is the Obama White House out of their fucking minds? Oh, there’s US tax dollars involved. They can deny it until hell freezes over but they lie like a rug.

  2. R.J. says:

    They better not be using my tax money. It’s bad enough it’s being used to subsidize people who vote for the likes of Haley Barbour and Rick Perry.

  3. Peace Nick says:

    When did the Treasury Department begin sending teams of economic experts anywhere?

    The Treasury Department’s job is to print the money and collect federal taxes through the IRS, and manage U.S. government debt. No dispatch advisers to banks in the Islamic world.

    Last time I checked, more than 800 U.S. banks are reportedly going belly-up this year. Evidently, the Treasury Department can’t be bothered to “advise” them.

  4. Chad Lebanon says:

    Afghanistan is not a part of the US Commonwealth.

    We have no business bailing out Kabul Bank. We can’t even fix the banks failing right here at home. This is one of the most bizarre things I’ve ever heard about.

  5. Stephan Iversonn says:

    The basis of this action is Executive Order 13550.

    Obama signed this order to create the Establishment of Pakistan and Afghanistan Support Office.

    Article 3 reads:

    Sec. 3. Functions of the Temporary Organization.

    In carrying out the purpose set forth in section 2, the PASO shall:

    (a) support executive departments and agencies in efforts to enhance civilian control and stable constitutional government in Pakistan, to promote a more capable, accountable, and effective government in Afghanistan that serves the Afghan people and eventually can function, especially regarding internal security, with limited international support, and to stimulate an economy that will provide licit opportunity for the people of Pakistan and Afghanistan;

    (b) assume the functions assigned to the Afghanistan Support Office (ASO) as of the date of this order; and

    (c) perform such other functions related to the specific project set forth in section 2 as the Secretary of State (Secretary) may assign.

    http://en.wikisource.org/wiki/Executive_Order_13550

    This is all part of Obama’s obsession with Pakistan and Afghanistan. I’m beginning to think he should run for president of one of those countries and just leave us alone.

  6. MichaelTAtheist says:

    Who’s going to bail US out when we’re broke????

  7. fran says:

    “The Treasury Department claims to be only advising the Afghan government on how to manage the crisis — even sending a team of experts to Kabul. ”

    That’s laughable really– the country currently in debt $13.5 TRILLION dollars is giving financial advice??

  8. Adirondacky says:

    Stephan Iversonn – Amazing link. I guess I was asleep or in a coma because I have no recollection of Obama sneaking this one in. He seems far more focused on Afghanistan and Pakistan than the USA. I don’t get it. It’s as if Obama is betting entire his legacy on all the good things he’s done for them and Americans can go to hell.

  9. I-Write says:

    I think the nytimes article is clear in that US is not paying to bail out the bank. They made a correction to the earlier article. That the Treasurey is only providing technical advice, and no money.

    And that is only right. Why should the US clean up the mess that a bunch corrupts keep on creating?

    http://costofwar.wordpress.com/2010/09/03/an-eroding-bank-at-the-heart-of-the-afghan-financial-system/

  10. feminazi says:

    I’m confused. If no American taxpayer monies will be used to shore up Kabul Bank, then where will the cash come from? What is the source? Treasury fails to tell us this. Underwriting the Karzai brothers is a core plank in our Afghanistan strategy. I thought Obama was smarter but I was wrong. He’s following the Bush doctrine to the letter.

  11. MichaelTAtheist says:

    President OBUSHA………. just more of the same Lies…………. What a HUGE DISAPPOINTMENT you are BORE_ACK!

  12. MichaelTAtheist says:

    In November of 2008, we thought we elected a new leader. Unfortunately all we got was the educated ”House Ni&&er”!

  13. MichaelTAtheist says:

    Who, when actually given a little responsibility………. doesn’t know what to do with it!

  14. Walk on Socks says:

    “…to stimulate an economy that will provide licit opportunity for the people of Pakistan and Afghanistan;”

    Why the hell is this president interested in creating economic opportunities for the people of Pakistan and Afghanistan when his economic team has failed to create the jobs Americans are desperate to see?

    I don’t know if this involvement meets the definition of a constitutional crisis or not — it may very well, but I think Mr. Obama’s priorities are, as they say, half assed backward and will lead to his political demise.

    Maybe this is how it should be.

  15. Pechanga says:

    I hope this country isn’t so foolish as to bailout any of Afghanistan’s banks while we’re in the midst of one of the US’s worst recessions on-record.

    But the US has made mistake before, so I won’t be surprised to learn my tax money is flowing to a bank owned by one of the Karzai brothers.

  16. Bel Ami says:

    Mr. Karzai said the government will guarantee every penny of the deposits in the bank. But Mr. Karzai fails to say which government he’s referring to, his own or ours?

  17. I-Write says:

    The Afghan government has enough reserves to bailout the bank on their own. The nytimes reported that Mr. Karzai says the money will be paid from Afghanistan’s foreign currency reserves, which Mr. Karzai said totaled $4.8 billion.

    http://costofwar.wordpress.com/

  18. MichaelTAtheist says:

    Say……….. President OBUSHA, I have an idea for you. Why don’t you put your children’s college fund into the Bank of Afghanistan, You dumb Bastard!

  19. Seabec says:

    Time and time again, President Obama has ran away from the progressive base who helped elect him and into the arms of the Afghan and Pakistan people.

    If anyone believes the Obama White House when it says no American dollars flowed into the Central Bank of Afghanistan, I would ask you to recall the wasted $60 billion of our money that was intended to go to Afghan reconstruction and is unaccounted for.

  20. Abbey Peripatetic says:

    What other kind of funds are there by US dollars?

    The ECB isn’t interested in Afghanistan. The ECB is wise enough to know investing in the Karzai brothers is a losing proposition. The Central Bank of China is busy growing their own economy are the Russian. Japan is in recession. Someone isn’t telling the American people the truth, as usual.

    I remember reading about Executive Order 13550 at Firedoglake. I was outraged as her the readers over there. All I know is, the longer Obama is president, the worse off we get.

    There is no compelling national security reason for the USA to send advisers or blank checks to the Central Bank of Afghanistan.

  21. Massagatto says:

    Once more, I read and reflect and I am left speechless as I watch President Obama stick his foot in it.

    The emergence of the Karzai brothers can be traced back to Carter years when the CIA backed various Afghan reactionary groups, trained and equipped by the U.S., Saudi Arabia, and Pakistan to overthrow the Afghan government. Zbigniew Brzezinski (Mika’s papa,) national security adviser to President Carter, to trick the Soviets into their own Vietnam debacle by baiting them into invading Afghanistan in 1979, a war that lasted a decade and led to the end of the USSR.

    Obama would have a greater chance of success if former President Najibullah were in power but when he was forced out of office and hanged by the Mujaheddin in 1992, the USA commenced ties to Ahmed Wali Karzai who was on the payroll of the CIA which is probably why the CIA turned a blind eye to the Karzai brothers drug trafficking. The CIA foolishly thought the Karzai boys could help the USA in its covert and overt was against both the Taliban and al-Qaeda.

    So no one should be surprised by the revelations that the US Treasury sent advisers and very likely a bank check with a lot of zeros on it to bailout the Central Bank of Afghanistan. Voters who thought President Obama would have a smarter foreign policy must be in shock now because he’s just another chapter in the Carter/Reagan/Clinton/Bush/Bush school of foreign relations.

  22. Nan Yun says:

    Thank you for posting the truth about the US role in the Afghani bailout. Few other news sources will dare challenge the administration on this. And to poster’s Stephan Iversonn and Massagatto, thank you for your insightful comments.

    I’ve learned quite a lot.

  23. Big Hank says:

    I agree with Nan Yun. An excellent and informative blog entry.

    Until I see proof of the source of the cash infusion, I am left to conclude the American people are paying to shore-up the Afghan financial system.

  24. William says:

    The U.S. Treasury Dept has been sending advisors to work with foreign central banks and finance ministries for a while now. That would be the Office of Technical Assistance which is discussed on the Treasury’s departmental website.

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