The financial bailout legislation of September 2008 was only passed after members of both Congressional houses were warned that failure to act would threaten civil unrest and the imposition of martial law.
U.S. Sen. James Inhofe, R-Okla., and U.S. Rep. Brad Sherman, D-Calif., both said U.S. Treasury Secretary Henry Paulson brought up a worst-case scenario as he pushed for the Wall Street bailout in September. Paulson, former Goldman Sachs CEO, said that might even require a declaration of martial law, the two noted.
Here are the original remarks by Senator Inhofe:
Speaking on Tulsa Oklahoma’s 1170 KFAQ, when asked who was behind threats of martial law and civil unrest if the bailout bill failed, Senator James Inhofe named Treasury Secretary Henry Paulson as the source. "Somebody in D.C. was feeding you guys quite a story prior to the bailout, a story that if we didn’t do this we were going to see something on the scale of the depression, there were people talking about martial law being instituted, civil unrest... who was feeding you guys this stuff?," asked host Pat Campbell. "That’s Henry Paulson," responded Inhofe. "We had a conference call early on, it was on a Friday I think – a week and half before the vote on Oct. 1. So it would have been the middle... what was it – the 19th of September, we had a conference call. In this conference call – and I guess there’s no reason for me not to repeat what he said, but he said – he painted this picture you just described. He said, ‘This is serious. This is the most serious thing that we faced.’"
Rep. Brad Sherman (D-CA 27th District) reported the same threat on the Congressional floor:
The only way they can pass this bill is by creating a panic atmosphere... Many of us were told that the sky would fall... A few of us were even told that there would be martial law in America if we voted no. That’s what I call fear-mongering, unjustified, proven wrong.
So it is clear that threats of martial law were used to get this reprehensible bailout legislation passed. It also seems clear that Congress was told of a threat of martial law, not itself threatened. It is still entirely appropriate to link such talk to the Army’s rapid moves at the time to redefine its role as one of controlling the American people, not just protecting them. In a constitutional polity based on balance of powers, we have seen the emergence of a radical new military power that is as yet completely unbalanced.