Imagine this scenario: The U.S. Congress, concerned about rising energy prices, future oil supplies and greenhouse gas emissions, holds a heated debate on a $700 billion bill to finance mass transit and development of alternative-fuels vehicles. The measure becomes an issue in the presidential race and is dissected on Capitol Hill and in newspaper editorial pages until the expensive measure is passed, with much fanfare. A month later, the Secretary of Transportation reports back. He says too many roads and bridges are in imminent danger of collapse, so he took most of the funds and spent them on highway infrastructure instead, without any public announcements or informing Congress of the 180-degree policy change until after the fact.
That would be pretty outrageous, right? -- but something along those lines, albeit more complicated, basically just happened with that $700 billion financial bailout that most folks weren't so happy about in the first place. The program is called TARP, which stands for Troubled Assets Relief Program -- except, heh heh, this is kind of funny, but...they decided not to buy any Troubled Assets after all.
Is this a great country or what? Here's an overview:
Mr. Paulson said the $700 billion would not be used to buy up troubled mortgage-related securities, as the rescue effort was originally conceived, but would instead be used in a broader campaign to bolster the financial markets and, in turn, make loans more accessible for creditworthy borrowers seeking car loans, student loans and other kinds of borrowing.
“During times like these with a slowing economy and some deterioration in credit conditions, even the healthiest banks tend to become more risk-averse and restrain lending, and regulators’ actions have reinforced this lending restraint in the past,” Mr. Paulson said at a news conference.
But, he added pointedly, with their financial foundations already shored up by recent government support, “our banks will be more confident and better positioned to play their necessary role to support economic responsibility.”
Here's the thing: A lot of people who know a lot about high finance say that Paulson's about-face is exactly the right thing to do, that the original TARP plan was not only hasty but ill-conceived (imagine that!) and that this completely different approach will do more to help the economy more quickly. Fine, then -- but why didn't Paulson reveal his decision to anyone sooner? The reason the $700 billion bailout didn't pass right away was because Congress wanted more accountability, and more of an oversight role.
So what exactly did our representatives vote for? There is no real oversight or accountability. So the question now also becomes: Where is the outrage? It's become increasingly clear these last few days (just after we voted...that's a coincidence, right?) that there is no transparency or any good public information about how the federal government is conducting one of the biggest non-military uses of our taxes dollars, ever:
How much will the AIG bailout ultimately cost? What are the banks applying for the government's $250 billion capital purchase plan? Who is the Federal Reserve lending to and how can taxpayers be assured they'll get their money back?
After weeks of sometimes frenzied efforts by the federal government to rescue the financial system, and on the heels of the government's latest move -- the announcement of a new $40 billion infusion to the ailing insurance giant American International Group -- critics say there are many questions but few answers about the work performed by the Treasury Department and the Federal Reserve.
"The bailout, the Treasury, the Federal Reserve -- it's like a three-card monte game, you don't know where the money's coming from, you don't know who it's going to, and I think the public has every right to be outraged by this," said Bill Allison, a senior fellow at the Sunlight Foundation, a government transparency watchdog group.
OK, so there's some outrage, but not too much. I was listening to some of the news coverage of Paulson's $700 billion switcharoo on the way into the office, and expected the blogosphere and the news world to be on fire over this, but not so much, not really. I think some of it is simply shell shock. On top of everything else, the Dow nosedived another 5 percent today -- that used to be Page One news, and now it's an afterthought. People don't know what's going to come next -- this is like the economic version of 9/11, and it's only 9:45 a.m. and we don't know if other planes are out there, or how many. Forbes is reporting tonight that the real bailout effort is $5 trillion so far....and counting!
Meanwhile, despite all this bailing out, virtually no useful help has gone to the everyday Americans with toxic mortgages or their homes already in foreclosure, and thousands of hard-working men and women in the auto industry are seeing their livelihood collapse without any government aid, even as billions flow to some banks that are relatively sound.
Did you vote for Henry Paulson, either four years ago or last week? Of course not, but he seems to have more power than any of the branches of government right now, and he's making huge decisions without telling much to Congress or even the president, for all we know. As noted early, his new policy may be an improvement, but only if there's also openness and honesty with the American public. Without that kind of transparency, you should be outraged. I know I am.
(Tarp picture from The 700 Level.)
Comment removed.- Comment removed.
Nice to see, sloboat, that with "grace," "dignity," and a fervor for patriotism, you are standing behind our next American president. The fact that you are willing to put your partisan differences behind you to work for what's best for our country is inspirational. And, I might add, speaks volumes about the integrity of Republican lackeys.— Talking point sleuth- Comment removed.
- I'm an independent -- I had no idea my "party" had so much power!— will
- Just because this just can't be posted enough. Fortunately, this is a quote from someone that, as of tonight, is looking increasingly less likely to become a U.S. Senator from AK: --snip -- My concern has been the atrocities there in Darfur and the relevance to me with that issue as we spoke about Africa and some of the countries there that were kind of the people succumbing to the dictators and the corruption of some collapsed governments on the continent, the relevance was Alaska’s investment in Darfur with some of our permanent fund dollars. -- snip -- Huh?— Talking point sleuth
- Do you want Congress to fix the economy, or people who know how the economy works? I'll take the latter. Congress, and specifically the House, are a bunch of glad-handing nutjobs, just as the Framers envisioned. If Treasury doesn't get it right in the first incarnation, so what? Think of every time you, Will, have started an article, only to have it go in a different direction than you originally intended. If that doesn't happen to you, you're too dogmatic to be any use to us.— BlairW
- After all those parties, pay to failed CEO's, spa outings, etc, they ran out of money and now are blaming the whole thing on Clinton and Obama! Georgie didn't have anything to do with what happened in the last eight years! Nancy pelosi should never have been allowed to take impeachment off the table! Apparantely being a felon, doing coke,alcoholism, pedophila, toe tapping, etc are all one needs to be in the white house these days and are especially needed if you are a Republican! Thank God for Obama and Biden! This whole Wall Street fiasco is owned by Bush and his deregulators!— nuffera
- what makes you think throwing 75 billion at GM is gonna make people start buying cars.— DNC
- Time for GM and the rest to start building smaller, better cars like they did after the phony gas crisis of the 70s. Don't blame the workers, they'll build what is designed. The head honchos thought they had a good thing going building nothing but SUV's for the most part. These guys are still getting millions, but conservative commentators are blaming it all on the unions. Highest paid union gut, who really works at his job, makes nowhere near what the honchos make. Conservative won't be happy until all workers are making $5 an hour or less with no benefits while they reap the big money. Time to put limits on what they can ean or spend on lavish parties and "business" meetings.— mike l
- Comment removed.
- this is exactly how the Democratic party wants to spend our money-throw it at a problem and tell us it is fixed, and to depend on them, wait for health care, and when they take over our 401 k(s)— sleepy
sleepy, how much is in your 401 k()? I don't want the gubmint to cheat me outta my share of it.
Paulson didn't know what they were going to do with the money to begin with. The goal was only to get it. Congress passed this measure knowing it was unpopular with a "we know better than you" attitude (get used to that). Now Paulson puts on the brakes. They're screwing this thing up worse than if they just let the market correct itself. Now you have people, businesses, and banks with their hand out for the big giveaway. These entities b**ched and maoned about government interference and regulation, but are now h*mping Paulson's leg to get at the loot. Once you let the government in, they will never get out. You'll have government reps sitting on the boards of every company worth anything in this country. Is this what they want? I know it's almost impossible, but that money should be revoked by Congress immediately.— jmc- yeah yeah, wait until they take all of your belongings and have you workign for free and living in barracks like little drone bees. Your missing the point. They've approved $700B for a plan, and the plan is changing with little or no oversight, and little or no outrage. that's all. It was all anyone talked about for a coouple weeks "they're taking oour money to buy out executives and wall street....." and now the plan has changed, few if any everyday americans know what direction the plan is now taking and there seems to be little concern. have rt admit, heard a news snippet about it last night, but this is really the first I'm hearing about it.— gee1971
Will Bunch, a senior writer at the Philadelphia Daily News, blogs about his obsessions, including national and local politics and world affairs, the media, pop music, the Philadelphia Phillies, soccer and other sports, not necessarily in that order.
E-mail Will by clicking here.
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