Thanks heavens that Congress, Democratic Senator Chris Dowd and Republican SenatorRichard Shelby, have taken a whoa, wait a minute view on this bailout measure. Under the guise of an emergency, the Bush Administration is doing a Financial Iraq – let us in with no controls or otherwise the system will meltdown and there will be a recession. Sounds like Treasury has the DOD-Bush-Rumsfeld Disease.
As originally written, the Bailout Bill has no oversight other than a semi-annual report to Congress, full immunity for Secretary Paulson and other bailout administrators, no accountability requirements for which banks and financial institutions get what type of bailout and aid, no compensation for taxpayers taking on as much as $700billion of Wall Street “toxic loans”, no commitment to either to regulation or reprimand for those institutions that overstepped there risk limits, and no effort to give bankruptcy judges the ability to work towards reduction in interest rates on foreclosing loans.
This is a sellout to Treasury, the Fed and SEC to do the right thing when they helped get the US in this mess – admittedly with different players at the head. But even Paulson, Bernanke, and Cox have been bending over backwards not to curb the prerogatives of banks and overleveraged equity/hedge funds. This is particularly vexing as these institutions failed to come clean on the extent of their own toxic holding; continued to fail to support “privately” funded bailouts or asking extortionate deals of the Lehmans, Merrils, AIGs and other at-risk financial institutions; and continued extraordinary compensation to their top executives who were complicit more and less in the excesses particularly use of extraordinary leverage and condoning barely risk-assessable derivative instruments.
Three cheers also for Yahoo and their Financial advisers that ask the very relevant question: What do taxpayers get for their $700 billion dollar bill.
Here is what other media are saying:
Barrons – again, has a Wall Street outlook, but calls the bailout “shockingly awful”
Business Week – echoes Fed Chief Bernanke, without bailout there will be a recession.
Economist – calls it “Carping” but does acknowledge the major issues
Forbes – its article shows there is resistance to the Bail Now, Ask Later Fed approach
LATimes – highlights how deep the bipartisan intransigence is
NYTimes – alerting that there is major pushback from many sources
Time – strong reporting of whats up
However, this episode is not over yet. Congress may yet do a Manhattan Deal – for a few baubles, beads, and downright token trinkets cave into the Treasury and Wall Street. If you thought Bush was bad – a Blank Cheque Bailout is worse.
Very important question – what DO we get for the money? If my money buys a few more months of a WStreet cowboy’s high living days and nights or a golden parachute for some idiot who managed his or her company into insolvency, I’m not much interested and more than willing to let the free market these folk love so much take care of them.
On the other hand, if this is going to help out people across the country who are suffering and working double shifts or jobs to keep roofs over their heads while paying exploding mortgages, then yes, I’ll ok this loan.
I agree explicitly with you and am loath to disclose a)that FED redirected money away from mortgage rescuesthat Fed managers allowed $500million in bonus pay to AIG executives in mid October and b)only in late November are the Fedsies considering some sort of direct mortgage relief(I know this is a tough one because there was some stupid homeowner greed going on here);
It appears two heavily ingrained precepts, like rotten teeth, have to be wrenched out of Wall Street behavior and/or DNA:
1)we can do “anything” because even if its against some “law”; its a white collar crime and nobody gets convicted for “raiding the Commons”;
2)our compensation can be both stratospheric and never declining no matter how badly we frack-up- for 2 reasons.
1)Everybody wants the “Brass Ring” goal of making it supergargantuan lottery BIG TIME-> a billon dollar pay packet taxed at less than half the Income Tax rate(we get our compensation in Capital Gains taxable packets) and often not even taxed at all as the pay packets are tax-sheltered in Caymans, Bermuda and other tax havens;
2)who in government already beholden to us for our campaign contributions, expertise+needed co-operation on the complex financial markets and our ability to mug-them through our Think Tanks declaring them as “class warfare extremists” – who is going to try to trim our Pay Scales ????? Yeah right … as likely as our salaries going down when our companies fail to perform.