Wednesday, November 12, 2008

In the Election Afterglow We Ask What Now? (Who Got the Dough?)

If you were a little bit confused today when you heard through the MSM outlets that Treasury Secretary Hankie Paulson had decided that the initial bailout plan was flawed, and that he would not purchase "distressed mortgage-backed securities and other troubled assets on the books of banks," but instead "had changed the emphasis because of a need to get money into the financial system much more quickly because of a worsening credit crunch," that would have been a very intelligent response.

Critics have charged that some banks may be tempted to hoard the money or use it to pay out dividends to shareholders or boost compensation for their executives unless regulators tighten standards.
Paulson also "said the administration would continue to use $250 billion of the $700 billion rescue fund to make direct purchases of bank stock as a way of supplying hundreds and potentially thousands of banks with extra capital in hopes that they will resume more normal lending . . . . the administration had decided that the original focus of the bailout program - the purchase of distressed mortgage-backed securities and other troubled assets on the books of banks - would not be employed." It was reported that the "administration has already spoken for all but $60 billion of the initial $350 billion supplied by Congress, including the $250 billion for direct stock purchases from banks and $40 billion for a new loan supplied on Monday to help stabilize troubled insurance giant American International Group." Our surprise savior, John Boehner, House Minority Republican leader from Ohio, rode up on his white charger and formally called "for the Federal Reserve to disclose the recipients of almost $2 trillion of emergency loans from American taxpayers and the troubled assets the central bank is accepting as collateral" just a few hours ago. Could this have had anything to do with Paulson's announcement today? Boehner also asked "the Federal Reserve to comply with a Freedom of Information Act request seeking details about the loans." Thanks, Johnny! As you are one of the guys who usually knows exactly where the bones are buried (or the bucks come to rest), it is of a slight concern when you evoke confusion about the transactions or a desire for an accounting of where a mere $2 trillion from the Treasury has slipped away to. Now exactly how was that program implemented? No transparency you say? Too much secrecy involved? Why would secrecy be an issue for what must be public-domain transactions? For all that money (and not even real money yet, just newly-printed "promise" money), I hope it's not in those famous Cayman accounts already too. When the "regular" thieves can't track the movement of the new thieves, that is a problem.
The Fed "should comply with this Freedom of Information Act request, and in the interest of full and fair disclosure, they must begin providing lawmakers and taxpayers all information about how they are using federal tax dollars," Boehner said. 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, there is little disclosure about how the programs are being implemented. Bloomberg News requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure. A spokesman for the Federal Reserve didn't immediately respond to requests for comment. `Oversight, Transparency' Boehner said he is increasingly concerned that the government's actions to add stability to financial markets is moving into areas that were not the stated intention when Congress approved $700 billion for a Treasury-administered program to bail out the financial sector that is being weighed down by the housing crisis. "During the bipartisan negotiations between Congress and the administration, members of both parties made clear that Congress must have meaningful oversight over the use of taxpayer dollars," Boehner said. "Transparency is even more important now, given that the program appears to have been implemented in some ways that were given little to no discussion as Congress was being urged to pass the rescue plan." Senator John Cornyn of Texas, a member of the Republican leadership, said the lack of disclosure "should trouble taxpayers and policymakers alike." "There cannot be accountability in government and in our financial institutions without transparency," he said. "Many of the financial problems we are facing today are the direct result of too much secrecy and too little accountability." Representative Scott Garrett, a New Jersey Republican who serves on both the Financial Services and Banking committees, said "it's impossible to get to the bottom of where we are because we don't have transparency."
Party on, public servants! Where do you supposed Rahmbo will alight? Or has he already? Suzan _________________________________

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