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.

AIG'S $85 Billion... Party Time!

What an outrage.... "U.S. Extends $38 Billion In New Loans to AIG." (WaPo)

That's after the $85 billion government rescue in mid-September.

They needed the money because their financial products division had made some risky and complex investments that had gone bad.... thus rewarding bad behavior not just once, but twice.

But, don't try this risky behavior at home, it can only be pulled off by professional corporate criminals with lobbyists in D.C.

And the second infusion came just a day after a House hearing found, among other things, that "AIG is paying one of the executives who led the company into some of its most costly mistakes $1 million a month as a consulting fee to help it unwind his bad investments.

"And just a week after the first bailout, the company treated some of its executives and some high-performing life insurance agents to a weeklong stay at the pricey St. Regis Resort in Monarch Beach, Calif. Total cost for the spree: $440,000."

In Tuesday night's debate, Barack Obama called for AIG to repay the taxpayers the $440,000 and fire the executives who authorized this despicable boondoggle. But he didn't go far enough.

There seems to be an elephant in the room everyone is missing.... we got into this financial mess due to a lack of oversight. Now we're bailing out those who plunged the country into this financial disaster through their greed with an EQUAL LACK OF OVERSIGHT, still lacking PENALTIES WITH TEETH.

Why should white-collar crimes only amount to a justification for unaccountable corporate welfare? Who is watching the billions being sloshed into the maw of corporate coffers in the wake of their maleficence?

As a start, how about a few perp-walks, and then outfitting the AIG criminal CEO's in suits that aren't the pin-stripe variety.

November 4.

McCain-Davis Ties to Freddie Mac

John McCain is having a run of bad luck. People aren't taking the Straight Talk maverick at his word anymore, and it's taking a toll.

The latest crooked talk comes from McCain's ties to the bailout of Freddie Mac. Turns out McCain Aide's Firm Was Paid by Freddie Mac. (NYTimes)

"One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month from the end of 2005 through last month to a firm owned by Senator John McCain’s campaign manager, according to two people with direct knowledge of the arrangement.

"The disclosure undercuts a statement by Mr. McCain on Sunday night that the campaign manager, Rick Davis, had had no involvement with the company for the last several years....

"They said Mr. Davis’s firm, Davis & Manafort, had been kept on the payroll because of Mr. Davis’s close ties to Mr. McCain, the Republican presidential nominee, who by 2006 was widely expected to run again for the White House.

"Davis took a leave from Davis & Manafort for the presidential campaign, but as a partner and equity-holder continues to benefit from its income. No one at Davis & Manafort other than Davis was involved in efforts on Freddie Mac’s behalf, the people familiar with the arrangement said."

In order to get around truth telling about Davis's involvement with the Federally-rescued Freddie Mac as interest is reignited with the controversy now swirling around the Bush administration's latest gigantic $700 billion bailout proposal, the McCain campaign states emphatically that Davis hasn't received a "salary" from Davis & Manafort since 2006.

It depends on what the meaning of "salary" is.... a truly Clintonian parse. Davis owns Davis and Manafort and shares in its profits.

McCain’s campaign has been attacking Senator Barack Obama for supposed ties to former mortgage lending officials of both Freddie Mac and Fannie Mae.... running a television commercial suggesting that Obama takes advice on housing issues from Franklin D. Raines, former chief executive of Fannie Mae, a contention flatly denied by Raines and the Obama campaign.

Freddie Mac’s roughly $500,000 in payments to Davis & Manafort began immediately after Freddie Mac and Fannie Mae in late 2005 disbanded an advocacy coalition that they had set up and hired Davis to run.

So..... it turns out that it's McCain's campaign manager who has the close and deep ties to Freddie Mac.

November.

Slow Down the $700 Billion Railroad

It's hard to get ones mind around $700+ billion, the size of the latest proposed bailout of Wall Street investment bankers who recklessly and deliberately ravaged the economy for personal gain.... without government intervention and oversight.

Now that same government, the Bush administration, wants to make their Treasury Secretary, Henry Paulson, Tsar of the Economic Universe.

Paulson is demanding a taxpayer-financed bailout with no strings attached.... with nothing required of those being bailed out.... and dictatorial authority.

The Decider and The Dictator want Congress to decide now.

Hurry, hurry.... the financial-collapse train is bearing down on us. Give the totally inept Bush administration unfettered power and trust Rumsfel.... umm.... Paulson to do the right thing. Sound familiar? Isn't this how we got into the other big Bush mess, Iraq.

As Paul Krugman points out in his New York Times op-ed today, Cash for Trash, Paulson "is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis 'contained,' and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing?"

And, in line with the closed-door, secretive, subpoena-ignoring, won't-be-sworn-to-tell-the-truth Bush administration's modus operandi, mindbogglingly, Paulson is demanding also immunity from review “by any court of law or any administrative agency.”

This is unacceptable.

Has Congress.... the taxpayers elected representatives who are supposed to look out for the interests of Main Street, not Wall Street.... learned it's lesson?

Or, will they once again be railroaded without insisting on prudent safeguards, curbs on power, and that blatantly discarded concept.... ACCOUNTABILITY!