Hullabaloo

Thursday, November 13, 2008

 
Magnificent Disaster

by dday

As Emperor Paulson dithers and shuffles papers pretending to look busy implementing the bailout, the lobbyists are lining up for their piece of the bailout cash, and apparently, nobody is keeping tabs on them:

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.

"It's a mess," said Eric M. Thorson, the Treasury Department's inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

Considering that the Treasury Secretary can hold press conferences pledging to do the exact opposite of what he initially asked for in the bill, considering that his department can change the tax code to provide a huge windfall to banks, telling me there's "no oversight" seems a bit self-evident.

In fact, the bailout plan itself appears to be working just as the Bush Administration hoped - as a "free-fraud zone" for moneyed interests to get paid off during an economic collapse. They even staffed it with one of the same guys that handed out bricks of cash to contractors in Iraq, before deciding that was too on the nose.

Under cover of an emergency, Treasury is rapidly turning into an economic Green Zone, overrun with private companies collecting lucrative contracts. Fittingly, one of the first to line up at the new trough was none other than the law firm of Bracewell & Giuliani — yes, that Giuliani. The firm's chairman, Patrick Oxford, could scarcely conceal his glee over the prospect of cashing in on the bailout. "This one," he told reporters, "is very, very big." At least four times bigger, in fact, than the post-9/11 homeland-security bubble, from which Giuliani and his various outfits have profited so extravagantly. Even bigger, potentially, than the price tag for the Iraq War itself.

See if any of this sounds familiar: As soon as the bailout was announced, it became clear that Treasury officials would hire outsiders to perform their jobs for them — at a profit. Private companies wanting to help manage the bailout were given just two days to apply for massive, multiyear contracts. Since it was such a mad rush — after all, the entire economy was about to implode — there was no time for an open bidding process. Nor was there time to draft rigorous rules to make sure that those applying don't have serious conflicts of interest. Instead, applicants were asked to disclose their conflicts and to explain — and this is not a joke — their "philosophy in fulfilling your duty to the Treasury and the U.S. taxpayer in light of your proprietary interests and those of other clients." In other words, an open invitation to bullshit about how much they love their country and how they can be trusted to regulate themselves.

I guess there's one positive - at least Treasury is hiring!

Meanwhile, Bush is headed to a meeting of world leaders to tell them they'd better not get any funny ideas about fixing his mess.

Nov. 13 (Bloomberg) -- President George W. Bush today will urge leaders of the world's biggest industrial and developing economies not to abandon principles of free-market capitalism as they seek an escape from the international financial crisis, calling it the "best system'' for delivering growth.

In a speech in New York before weekend talks among leaders from the Group of 20 nations, Bush will say policy makers "should fix the problems we have rather than dismantle a system that has improved the lives of hundreds of millions of people around the world,'' according to a statement released by the White House [...]

For all his defense of markets, Bush this year extended the reach of government by backing bailouts of American International Group Inc., Bear Stearns Cos., Fannie Mae and Freddie Mac. His administration is also implementing a $700 billion financial rescue program which U.S. Treasury Secretary Henry Paulson yesterday shifted toward relieving pressure on consumer credit, scrapping an effort to buy devalued mortgage assets.

Of course, corporate welfare and socialism for the rich IS the "free-market system" that Bush is defending. It's the only type of economy he has ever known.


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dday 11/13/2008 10:18:00 AM |