Thursday, November 13, 2008

Bailing Out the Bailout

Congress gave the Bush administration the power to go to war in Iraq if all else failed.... with a misleading MWD scare. The Bush neocons snatched up that power and ran with it, right into a mismanaged wall.

That was the first "big time" Bush White House policy disaster.

Fast forward to September 2008 and the second "big time" disaster.... the collapse of the U.S. financial and housing markets.

Congress once again trusted the Bush administration with $700 billion plus to "manage" the collapse. The Bush Treasury snatched up that money and ran with it, right into a mismanaged wall.

The headline says it all... "Bailout Lacks Oversight Despite Billions Pledged - Watchdog Panel Is Empty; Report Is Unfinished" (WaPo)

The alarming news is that "In the six weeks since lawmakers approved the Treasury's massive bailout of financial firms, the government has poured money into the country's largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

"Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

"Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed."

What happened? "In approving the rescue package, lawmakers trumpeted provisions in the legislation that established layers of independent scrutiny, including a special inspector general to be nominated by the White House and a congressional oversight panel to be named by lawmakers themselves."

This rudderless bailout of taxpayer gold is drifting toward the shoals without a captain, or a crew.

Will it help that the bailout legislation provided for a Financial Stability Oversight Board "whose five members include Paulson and Federal Reserve Chairman Ben S. Bernanke?" Hardly, "it has no staff of its own, and few expect that policymakers can conduct oversight of themselves. 'It's sort of a joke in terms of oversight,' a congressional aide said.

So, where are we? Yesterday a panicky Treasury Secretary Paulson addressed the nation.... "Treasury Redefines Its Rescue Program - Plan to Buy Distressed Assets Is Abandoned In Favor of Aid to Loosen Consumer Credit" (WaPo)

Paulson announced a series of moves that redefine the federal government's $700 billion rescue plan for the financial industry "in order to tackle what he called a dire situation in the consumer credit markets.

"In recasting the program, the Treasury no longer plans to buy troubled assets from financial firms, the idea initially presented to the country, but instead will offer aid to banks and other firms that issue student, auto and credit card loans in part by jump-starting the market that provides financing for these companies."

This latest reversal of Congressional intent evidently took The Hill by surprise.... it's stunning that they still trust, that they can still be surprised by The Decider's maladministration. It's clear that Bush has already mentally moved on to his Texas rocking chair, Paulson is the poster boy for the Peter Principle, and the Obama calvary is charging ahead but they're still in transition limbo-land.

The tourniquet needed to stop the financial hemorrhaging is public confidence in government and jobs. The administration's entire unaccountable bungling approach has made the situation worse.... consumer confidence is in the dumper.

Now it's a race to see if the economy can be kept on life support until it reaches the Obama emergency room on January 20.

No comments: