Bailouts, Stimulus, Etc. – What Has The Rush Gotten Us?

Drudge Report has been trying mightily since Saturday to “sell” this story: If there was such a hot rush to pass the stimulus bill, why was President Barack Obama taking the weekend off in Chicago?

What Drudge does is show he’s in the tank for the Republicans when he runs a picture like the one to the left “above the fold” all weekend with the following headline: What’s the rush? ‘Urgent’ stimulus on hold for Obama’s weekend off …

First of all, no president of the U.S. has a “weekend off.” Not even George W. Bush, although some may say he took years off.

This is a potshot – Drudge urging the producers over at Fox News to beat up on the president.

But, despite Drudge’s partisanship, he points out a real problem with Republican and now Democrat management of the U.S. economic crisis.  Our politicians are scaring us silly and ramming TARPs, assorted bailouts and stimulii through the government machine with very little transparency and even less accountability.

Back in the Fall when the Troubled Asset Relief Program, aka $700 billion bailout, was rammed through Congress there was lots of scary talk about meltdowns and companies so big and far-reaching that we couldn’t possibly let them fail.  $350 billion of that bailout went out to the banks and Wall Street.  We still have barely working credit markets.  They’ve loosened up a bit, but nothing much has changed in the past several months.  We also know that a lot of our tax dollars were wasted on bonuses, exorbitant compensation for failing management teams, mergers and acquisitions.

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Relief Plan for Foreclosures on Wednesday …

An article in the Times of London talks about President Barack Obama’s tough road to hoe on economic stimulus and bailing out those bankers who are too big to fail.  According the Times, Obama will travel to Phoenix on Wednesday and unveil a $50 billion plan to directly help those facing foreclosure.

Barney Frank, the Democratic chairman of the House Finance Committee, said Mr Geithner should not to repeat the mistakes of his predecessor Hank Paulson, who “lost sight of the rest of the country and pissed them off entirely,” with his initial bank bailout.

He Frank warned the Treasury Secretary that voters want to see fewer foreclosures and more bank lending to ordinary consumers before they support the rest of the financial rescue plan. “They understand the political need,” Mr Frank said.

If these guys think that just because they work $50 billion in for the little guys while they still talk of trillions for bankers and brokers that folks like me will fall in line on bailouts – they’re nuts.

I hope we can get the right kind of help to those folks who were taken advantage of, but that doesn’t make wasting our dollars on Bank of America and Citi any more palatable.  If we’re going to sink taxpayer dollars into more bailouts of the people who created the mess, I want to see value for that investment.  That’s what nobody’s explained – Barney Frank, Tim Geithner and all the rest.

The Daily Graphic: TARP (Bailout) Recipients 2008 Lobbying Expenses

Over the course of 2008, companies like Bank of America and PNC Bank Corp. shelled out well over $100 million to lobby Washington politicians on behalf of the financial services and banking industry.  Others on the list of handing out the big bucks to the likes of members of Congress, Bush and now Obama Administration officials include, Goldman Sachs, Morgan Stanley, CitiGroup and JP Morgan.  Information and graphic courtesy of The Center for Responsive Politics.

After Geithner’s Performance, Nationalization Now …

Nobody’s talking Communist takeover, but this article just up at the New York Times site makes you wonder why the smartest people in the room don’t seem to have learned from the travails of others. (Japan, Sweden)

Nationalization would mean that taxpayer money was at least going toward something we of which we would have at least notional ownership.  Nationalization would allow the government to target the banks worthy, by some standard, of saving.  After five or ten years, shares of those banks could be offered into the market where they would be on their own once again – with the taxpayers reaping the financial benefit for taking the risk in bringing them back from the brink.

Or, how about letting all of those that may fail, fail.  Keep our money out of the game until the dust clears and then use the two to three trillion of taxpayer dollars as seed money for honest people to start new banks in a better regulated system?

At any rate, here’s a bit from the Times tonight:

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.

The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.

Bank Bailout: Hurts Worse When the Politicians Failing Us Inspired Hope and Promised Change

There are so many things to dislike about the big banks, brokerages and insurance companies that brought the financial crisis upon us that one doesn’t know where to begin.  So instead, let’s begin with the politicians who we elect and pay to keep us out of these messes.

They failed us last fall with the first enactment of the TARP – the $700 billion bailout – and they’re failing us again.  Only now it hurts worse because the folks failing us are the ones who inspired hope and promised change.

I had a fantasy that change would mean a different approach in handling the greed and inequity which hide behind the  corporate ramparts.  I thought change would mean a president taking advice from the likes of Krugman and Galbraith and instead we’ve got Summers and Geithner.  Where the problem with Krugman and Galbraith may be that they’re too “liberal” for a president trying to be non partisan and centrist, the answers to our problems do not lie with “the establishment,” represented by Summers and Geithner.

I’m angry, there are lots of people angry, and we don’t want to be told any reckless business is “too big to fail.”

On Tuesday, Geithner was still singing, Too Big to Fail.  He didn’t tell us much, but he did tell us Washington is still willing to pull out the stops for the investment class.  Congress is no better.  When it comes to the financial services sector, Congress is operating in the irrelevant sector.

What we do still have a chance at here is change.  Some players need to be thrown out of the game, and their survival shouldn’t have anything to do with how far their tentacles reach into the larger economy or the campaign accounts of our elected officials.

So, here’s another fantasy … Perhaps Treasury Secretary Timothy Geithner’s announcement Tuesday was only a trial baloon.  Maybe he and Larry Summers were on the phone with Robert Rubin and Alan Greenspan and thought they might be able to rig the game one more time for Wall Street.  Geithner may have said, “Boys, I just don’t know, I think we’ve run our string, but I’ll try for one more – but I’m telling you, if there’s blowback, this president is different than the last two …”

That’s my fantasy anyway.

Video: Geithner Interviewed by Brian Williams and CNBC Reporter After Bailout II Announcement

Full Text: Remarks by Timothy Geithner on Financial Stability | Bailout II | TARP, Financial Crisis

(Source: Dept. of the Treasury)

Secretary Geithner Introduces Financial Stability Plan

Remarks by Treasury Secretary Timothy Geithner
Introducing the Financial Stability Plan
Tuesday, February 10, 2009

As prepared for delivery

As President Obama said in his inaugural address, our economic strength is derived from “the doers, the makers of things.”

The innovators who create and expand enterprises; the workers who provide life to companies; this is what drives economic growth.

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Sherrod Brown Skips Geithner Vote, Glad He Did

When you watch the issues that Sherrod Brown fights for on behalf of Ohioans and all Americans in the U.S. Senate, and you consider how damn smart the guy is, is it any wonder he’d miss the vote confirming our new Secretary of the Treasury?

Here’s what I know about Timothy Geithner.  He was talked about as one of the primary architect’s of former SecTreas Henry Paulson’s $700 billion Wall Street bailout.  $350 billion of that Congressionally approved money is spent, seemingly up in smoke, and not much of it seems to have untroubled any assets which needed relief. National City Bank, formerly of Cleveland, is now part of the PNC Bank Corp. courtesy of some of those TARP funds.

The TARP is an ongoing FAIL of massive proportions and those who designed it, demanded its rush through Congress and created the climate of fear under which it was passed should be precluded from further public service.  Oh, that would be accountability.

Geithner was also an undersecretary at Treasury during the Clinton years, involved with international affairs.  How much you want to bet Brown and Geithner have some “free” trade disagreements?

I keep hearing what a financial genius Geithner is – I just hope his smarts are to put to use for the average taxpayer in this country, it’s obvious he can carry the water for the BoAs, Citis and PNCs of the world.

Who knows what was up with Sherrod today?  Could’ve been otherwise engaged, family issue, stuck in an airport, etc.  Perhaps he didn’t want to slight the new President, but just couldn’t hold his nose and vote for Geithner.  Maybe he’s like me and wants Paul Krugman in charge of Treasury.

Congress to Set Up ‘Recovery.Gov’ to Watchdog Massive Economic Stimulus Program

What you see above will some day soon be the U.S. government’s website to track stimulus spending.  Congressional Democrats have reserved the site to allay public fears about government waste of what is now suspected to be an $825 billion economic stimulus package.  There are also plans for there to be a way for citizens to lodge complaints or blow the whistle on potential waste of stimulus funds.

Congress is in a hot rush to get this bill approved and on the president’s desk sometime in February.  According to the Washington Post, House Appropriations Chairman Rep. David Obey said the bill is “the largest effort by any legislative body on the planet.”  In terms of dollars, would that make last year’s Troubled Asset Relief Program the second largest?

Only – did I just say ‘only’? – $125 billion separates the two bills in terms of financial impact.  This new bill, though, is many times more complicated with its mix of tax policy and targeted spending.

One problem with the $700 billion bailout (TARP) has been transparency.  When the Associated Press asked several of the banks who have received TARP funds questions such as have you spent it, where did you spend it, how much is left, what are your plans for it – not one institution would answer their questions.  I’ll look forward to recovery.gov and have high hopes that someone will be held accountable for the next $800 billion.

Bank Failures in the Hundreds a Possibilty in 2009

Eatin’ my lunch, reading up on my economic news, and this caused me to spray yogurt on my monitor:

But banks will fail, and at numbers large enough to cause alarm.

“I do think some of the actions taken by both the Fed and Treasury will limit the failure, especially at the larger banks, that we have seen in the late ’80s or early ’90s,” Mustascio said. “But to think we’re not going to see more failures in 2009 is probably naive.”

The US saw 40 banks fail in 2008 and the number is expected to multiply this year into the hundreds.

While banks have been allowed relatively liberal access to the TARP funds, some are still burdened by huge losses suffered in the collapse of the subprime mortgage market as well as credit issues fed by consumer weakness during the recession.

That little gem comes courtesy of a CNBC story on the problems with the stock prices of Bank of America and Citi.  It came at the end of the story

Called It … Word of the Year is ‘Bailout’

Just read on Huff Post, The American Dialect Society has voted and 2008’s Word of the Year is: Bailout.

Regular readers of C² may recall that I called this one last week.  We are a nation bailing ourselves, although it remains to be seen what the government bailout efforts are really worth.

While you’re thinking about the word bailout, you may want to check out what the Government Accountability Office had to say about Congress’ and the Bush Administration’s $700 billion bailout of Wall Street a coupla months ago.  While these funds were supposed to spur the credit markets to begin lending again they’ve mostly been tucked into savings, executive bonuses and used for mergers and acquisitions.  Public, screwed again.

Supposedly, the Bush Administration, in a moment of sanity, orginally said that they would save the remaining $350 billion of that bailout (the TARP) for the next Adminstration.  Now, in this story from the Washington Post today, it looks like the Bushies want to dole one more massive piece of corporate welfare before they leave.  Their problem is that Congress has to approve it.  Our problem is that Congress wrote the original, rushed and shitty bill.

Mary Jo Kilroy’s Committee Assignment Puts Her in Center of Economic Recovery Efforts

Freshman U.S. Rep. Mary Jo Kilroy has gotten a seat on the high profile House Committee on Financial Services chaired by Massachussetts Rep. Barney Frank.

Frank’s committee has taken center stage in combating the U.S. financial crisis.  The much and rightfully maligned Troubled Assets Relief Program, aka, $700 billion bailout, originated in Financial Services.  Frank also pushed for a bailout of the U.S. auto industry, but Senate Republicans killed that effort until the Bush Administration stepped in with $17 billion for GM and Chrysler late last month.

Kilroy and her fellow Congressional Democrats will be in a unique position very soon after President-elect Barack Obama takes office in a couple of weeks.  The original bailout bill called for $350 billion of the $700 billion total to be disbursed by the U.S. Department of the Treasury, led by Treasury Secretary Henry Paulson.  Paulson has been roundly criticized for the money not serving the purpose for which Congress intended – unlocking frozen capital markets.  The Government Accountability Office and an oversight arm of the committee which Kilroy now serves found several problems with how the money has been disbursed, chief among them accountability.  Bailout dollars have been used to pay out executive bonuses, sit as cash holdings and used by some banks to acquire others.

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Word of the Year 2008: Gotta Be Bailout!

In six days when the American Dialect Society chooses its 2008 ‘Word of the Year,’ I’ve no doubt it’ll be “bailout.”  Bailout has become the word the government cannot kill.

Bailout has been used and overused.  It’s been in every newspaper or on every news-oriented website since September.  The largest economy in the world is now in a constant state of “bailout.”  The government hates this.  They would prefer euphemisms.  Bailout just sounds so messy.

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Auto Industry Bailout Update: All Eyes on Bush

5:15 p.m.

• Bush changes mind, may bail out auto industry – Politico
• White House readies new auto industry rescue - Associated Press
• GM, Chrysler may win reprieve with access to TARP – Bloomberg
• White House considers other funds for Big Three – Washington Post
• Dodd: GOP tried to create a “wreck” - Washington Post
• UAW at center of dispute over bailout – New York Times

Latest News: Fate of Auto Industry Bailout – Friday a.m.

• White House will consider Wall Street funds – Associated Press
• Bush Administration may tap bailout funds – Congressional Quarterly
• White House considers use of funds for automakers – New York Times
• Auto suppliers share bailout anxiety – New York Times
• Senate abandons bid to bailout automakers – New York Times

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