So, How’s That Bailout Working Out For Us?
On September 29th, I wrote,
Let me make a simple prediction; John McCain backs the bailout, he loses the election.
Guess what? John McCain lost the election and the conventional wisdom (and it’s correct in this case) is that it was because of the bailout.
Then back on October 3, I wrote…
There’s supposed to be another bailout vote today in the House. If it goes through, there are a few things I want you to remember….
#1) “Everybody” didn’t agree that we needed to do a bailout at all.
#2) “Everybody” didn’t say, “We have to do something,” immediately.
#3) “Everybody” didn’t agree that the plan would work.
#4) There were better alternatives that weren’t considered.
#5) There were plenty of people saying, “Slow down, craft a better bill that protects the taxpayers.”
Here’s what I’d recommend to Republicans: represent your constituents, not a President trying to protect his legacy or Wall Streeters looking for a handout.
This is not a good bill and you know it.
If this bill goes through, it’s going to inspire lots more people to ask for handouts and you know it.
Conservatives oppose this bill and you know it.
Do the right thing; vote it down.
Guess what? The bailout that was supposed to fix all of our problems has been an unmitigated disaster. Just look at the waste, the other people lining up for bailouts, the lack of transparency, and the other drastic measures that they’ve had to take because the bailout didn’t work in the first place.
Let’s see, here are a few stories that have come out about the bailout:
* General Motors Corp. and Ford Motor Co., which have already gotten 25 billion dollars in loans now want more. Congress is considering it and likely will pass it through next year.
* The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.
* “Even as the company was pleading the federal government for another $40 billion dollars in loans, AIG sent top executives to a secret gathering at a luxury resort in Phoenix last week.”
* Some of the nation’s biggest banks are in for a windfall — on top of the $700 billion government bailout — thanks to a new tax policy quietly issued by the Treasury Department.
The notice gives big tax breaks to companies that acquire struggling banks hit hard by the mortgage crisis. In some cases, the tax breaks could exceed the cost of acquiring the banks, according to analyses by private tax experts.
Insurance giant AIG is to get fresh financial help from the US government, which will bring the total aid package for the firm to about $150bn
* Gary Crittenden, chief financial officer of Citigroup, hinted his company would use its $25 billion share to buy up competitors. The handout “does present the possibility of taking advantage of opportunities that might otherwise be closed to us.”
Morgan Stanley plans to pay themselves $10.7 billion, much of it in bonuses. “Not only did we, the taxpayers, save their company,” writes Bloomberg columnist Jonathan Weil, we funded their 2008 bonus pool.”
* We even had bank nationalization forced on private companies — and by a Republican President no less.
The United States ushered in a new era in banking on Tuesday with plans to take equity stakes totaling up to $250 billion in financial institutions, an incursion into the private sector that U.S. officials called a regrettable last resort.
Markets initially rallied on the rescue plan, continuing the previous day’s rebound, but recession fears soon took over and Wall Street stocks closed lower.
U.S. Treasury Secretary Henry Paulson said government ownership of big stakes in banks was “objectionable” but necessary to head off the financial crisis.
So, let’s tally up the damage: the bailout didn’t work (Why else did we need to pump in trillions more otherwise), taxpayers are out hundreds of billions of dollars, more bailouts have already occurred and more are on the way, fatcat bankers are using the money for bonuses and trips to resorts, John McCain lost the election — and the Democrats are going to have a 700 billion dollar slush fund, created by the Bush administration, that they can use to dole out cash to their political allies.
You know who really deserves the blame for this whole mess? The politicians in D.C.
The Democrats created this mess in the first place by forcing banks to give bad loans to people who might not be able to pay them back and when it all fell apart, the Republicans knew what to do (use loans and insurance to deal with the crisis), but they didn’t have the political courage to do it. Instead they chose socialism, threw away their chance to capture the presidency, and betrayed the people who sent them to Washington. What a sorry bunch they are…