My phone conversation with Henry Paulson

Last night, I got a phone call from Henry Paulson. While the members of the U.S. Congress were dragging their feet on the $700 billion package for Wall Street, the Treasury Secretary urged me to quickly send some cash to bail out the imprudent banks.

For our family, Paulson explained, the bill would be $7,000. If we wanted to pay up for all members of International Rivers in the US, the amount would be $1.2 million. This would cover the salary and bonus of Jamie Dimon, JP Morgan Chase's CEO, for one month, and give the bank some breathing space to offload its bad debt to the taxpayers.

Congress members in election mode are giving the Treasury Secretary a lot of trouble already, and I didn't want to be the one who pulled the plug on Wall Street. I was just about to give Henry Paulson my credit card number when I took a closer look at the portfolio of the banks I was going to subsidise.

I noticed that JP Morgan Chase had repeatedly financed the operations of the pulp producer Aracruz, one of the most egregious loggers in Latin America. And I remembered that the bank had just offered the Ethiopian government a $400 million loan for the controversial Gibe III Dam.

Gibe III, Ethiopia's largest hydropower project, will create a 150 kilometre-long reservoir and divert the Omo River. The dam will have serious environmental impacts on the Omo National Park, an area of great biodiversity, and the Lower Omo Valley, which has been designated a World Heritage Site.

The region is inhabited by traditional farming and pastoralist groups, yet the local population will not benefit from the project. The electricity generated by Gibe III will be exported to Kenya. In violation of Ethiopia's environmental policy, construction on the project has already started without the required permit from the country's Environmental Protection Agency.

International Rivers and the Italian "Reform the World Bank" campaign raised all these problems in a letter to JP Morgan Chase after visiting the Gibe III site. The World Bank and other financial institutions declined to get involved in the project. Yet the Wall Street bank didn't even respond to our letter.

As I was pondering these issues, Henry Paulson grew increasingly impatient at the other end of the line. Yet I wasn't prepared to move over the money.

I realised that when it comes to the environment, Wall Street banks displayed the same imprudent lending practices that they used in the housing sector. Just as they speculated with subprime mortgages for home owners who could never pay up, they recklessly (to borrow a phrase from my colleague Bruce Rich) mortgaged the Earth.

The Global Footprint Network, a California-based environmental research institute, just reminded us that by September 23, humanity had consumed all the resources the planet will produce this year and went into ecological deficit spending.

The dams, coal mines and deforestation projects which JP Morgan Chase and other banks are funding draw down the planet's capital even more quickly. And once environmental subprime projects have depleted our ecological capital, no other planet will be there to bail us out.

The Wall Street banks have made themselves so indispensable to the U.S. economy that we may eventually have to bail them out. But as the free marketeers keep telling us, there is no such thing as a free lunch.

While I put away my credit card, I told the Treasury Secretary that I would only bail out the Wall Street banks if they adopted strict environmental policies which prevent further environmental subprime loans that squander the planet's capital.

And I would only help subsidise the salaries of Wall Street executives if their compensation packages were tied to the environmental and social sustainability of their portfolio. So sorry Mr. Paulson, but no more free lunches on the back of the planet.

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