Tag Archives: Bush-Pelosi Bailout

Worse than a jet, or an office

It’s fashionable to complain about CITI’s bailout-funded jet or Merrill’s bailout-funded office. But a far more troubling are Wall Street’s bailout-funded lobbyists:

Robert Reich’s Blog: How You and I Are Paying Wall Street to Lobby Congress to Go Easy on Wall Street
The new administration and Congress are busy preparing the second tranche of bailout money for Wall Street — TARP II — at the same time they’re developing a new set of regulations to make sure Wall Street doesn’t get into this kind of mess again. But will the old politics intrude?

Wall Street is one of the biggest campaign contributors to both parties, and the Street’s contributions have increased considerably over the last several election cycles. According to the Center for Responsive Politics, by the 2006 elections, Wall Street contributions to the Democratic Party had caught up with its rising contributions to Republicans.

Yet what’s happened to the Wall Street campaign contributions and to the lobbyists? They’re still going strong. We now know that many of the financial giants that have been bailed out by taxpayers continue to finance a platoon of Washington lobbyists, who are at this moment trying to influence TARP II and the next attempt to regulate Wall Street. In effect, your money and mine, and that of all other taxpayers, is paying these lobbyists to push Congress in a direction we have every reason to believe is not in our interests but in the continued interests of Wall Street. Citigroup, the recipient of $45 billion of taxpayer money so far, is still fielding “an army” of Washington lobbyists, according to the New York Times. Its lobbyists are working on a host of issues, including the bailout. In the fourth quarter of 2008, when it got its first infusion of bailout money, Citi spent $1.77million on lobbying fees. During the last three months of 2008, at least seven other firms receiving bailout funds (American Express, Capital One, Goldman Sachs, KeyCorp, Morgan Stanley, PNC and Bank of New York Mellon) lobbied the government about the bailout.

It is dangerous to the country that Washington is giving failed banks money with which to extract political favors from Washington.

Six months ago, if I would have been asked what the largest, most politically connected, corrupt, and insolvent banks were, I would have guessed names like Industrial and Commercial Bank of China, and China Construction Bank: not Citi and Bank of America.

It would be better to allow the banks to be nationalized than keep funding this aristocracy of pull.

(Hat-tip to Economist’s View.)

The $350 Billion UAW Bailout

Rumors are swirling that President Bush may use Bush-Pelosi Bailout funds to save the UAW, General Motors, and Chrysler.

But even while Detroit is lobbying against local governments buying fuel-efficient vehicles and selling biodiesel trucks that aren’t, the Detroit 3 and their monopolist union supplier may be saved by this maneuver:

Bush may give funds to the Detroit bailout on the condition that Congress not refuse $350 billion more for Wall Street.

Detroit is in trouble because of its coddling of its unions, its incompetent management, its short-sighted use of government connections, and its love of debt.

Next up: a newspaper bailout? (courtesy gmgDesign)

Rescind the Bush-Pelsoi Bailout?

The Bush-Pelosi Bailout, also called the TARP (Trouble Asset Relief Program), is not popular. The Bailout was passed because George Bush and Nancy Pelosi scared legislators legislatures into giving an unprecedented amount of power to the President during peacetime. We were told that unless we began buying subprime mortgages right now, the world financial crisis would end.

Well, no subprime mortgages were bought. None will ever be bought. Instead, the TARP bailout funds are becoming a political slush-fund. Cities want TARP money. The United Auto Workers want the money. he only thing we know about the people who do not get help is that we will never know about them.

We are no longer in a financial crisis. LIBOR, the rate at which banks lend to each other, is at its lowest level in years. We are now in a bad recession, and we should allow our Constitution to work without the questionable manipulations of the Secretary of the Treasury.

Senator Inhofe says we should cancel the bailout. Ray Hennessey says we should begin unwinding the program. Razib notes that the bailout distracts from real issues of economic equity.

Economic Plans

McCain’s plan, to buy bad mortgages from people who can’t afford them, and then have the home owners pay back the new market value, is a give-away to foolish speculators. Obama’s right to hit him on the bail-out to banks, but Barack’s silence on the give-away to foolish home-owners is worrying (if predictable).

The latest news from Treasury, that the government is considering using the $700 billion to buy stock instead of subprimes, is promising. I’m glad someone is reading this blog!