The Impossible Will Take a Little While
Stiffed: Why Are Bailed-Out Banks Helping Pfizer Buy Wyeth?
Are U.S. taxpayers getting stiffed? Pfizer, Viagra’s daddy, is using money from taxpayer-bailed-out banks to help buy major pharmaceutical competitor Wyeth in a $68 billion deal. That won’t help taxpayers or consumers. Nor is it designed to. It will harm the companies’ workers, 20,000 of whom will likely be laid off. It’s even likely to hurt small bio-tech companies, drying up potential sources of capital and leaving fewer potential major investors or purchasers.
The deal may be good for Pfizer, helping the company recover from a $2.3 billion legal settlement over misleading marketing on the pain reliever Bextra, and helping them amplify the clout of the $3 million they recently spent lobbying against the right to import cheaper drugs from Canada. But it won’t help the rest of us.
So why are banks bailed out with taxpayer dollars furnishing the $22.5 billion of debt financing for this deal? On NPR, a financial analyst crowed about how wonderful it was that major banks were lending this kind of money in the current economy. But it troubles me that among the deal’s prime financial backers--Bank of America/Merrill Lynch, Barclays, Citigroup, Goldman Sachs and J.P. Morgan/Chase--all but the British-owned Barclays received money from the Congressional bailout. So the funds they lent to this merger won’t be available to help smaller (or larger) companies keep their doors open producing and selling products--ideally ones that actually benefit society--and not just to consolidate control over their industry. This seems one more case of public subsidies for private gain.
I’m no economist. For all I know, maybe in some Henry Paulson-Alan Greenspan dream world this will end up boosting America’s physical and fiscal health. Perhaps the new combined entity will come up with some miracle drug that neither company would have created on their own. But mostly, it seems just one more example of how a bailout without strong government control, or even oversight, just feeds the same greed-driven abuses that have gotten us into our current predicament. It’s going to take more than Viagra to strengthen our economy once more.
Paul Rogat Loeb is the author of The Impossible Will Take a Little While: A Citizen's Guide to Hope in a Time of Fear, named the #3 political book of 2004 by the History Channel and the American Book Association. His previous books include Soul of a Citizen: Living with Conviction in a Cynical Time. See www.paulloeb.org To receive his articles directly email firstname.lastname@example.org with the subject line: subscribe paulloeb-articles