I'm Sure There's a Difference Between the Bush/Paulson, Obama/Geithner Approaches to Bailouts
I'm just not sure what, in terms of significance:
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.
Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.
At this point in time, there is only one significant functional difference between Paulson/Bush and Geithner/Obama. Both intended to give a ton of money to financial firms, either directly or by buying up crap at prices higher than justified. Both opposed any meaningful restrictions on how they spent the money or who they gave it to.
Actually, I take it back, one difference is that when Paulson wanted 700 billion, he went to Congress. When Geithner made up his plan he just had the FDIC and the FED pony up most of the money, because he knew Congress wouldn't give him the money.
Some wonder if this is legal:
Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.
Me, I don't know if it's legal. What I do know is that they plan on giving money away in a manner which clearly intends to end-run Congress's clearly legislated mandate for how it be given away. What I know is that they are bypassing Congress when they can, because they know that the elected body which is the only one supposed to be able to pass spending bills wouldn't give them all the money they want to spend and won't let them spend what money it does give as freely as they want to.
Of course, that money will still have to be paid back by taxpayers, even if Congress never approved the spending.
But back to the TARP restrictions:
Congress drafted the restrictions amid its highly contentious consideration of the $700 billion rescue legislation last fall. At the time, lawmakers were aiming to reform the lavish pay practices on Wall Street. Congress also wanted the government to gain the right to buy stock in companies so that taxpayers would benefit if the firms recovered.
The requirements were honored in an initial program injecting public money directly into banks. That effort was developed by the Bush administration and continued by Obama's team. The initiative is on track to account for the bulk of the money spent from the rescue package. All the major banks already submit to executive-compensation provisions and have surrendered ownership stakes as part of this program.Yet as the Treasury has readied other programs, it has increasingly turned to creating the special entities. Legal experts said the Treasury's plan to bypass the restrictions may be unlawful.
The problem is that while Geithner's plan takes money from the FDIC and the Fed, it still uses some TARP money as seed money, and that money carries the restrictions.
I thought it wasn't the executive's job to decide that Congress is wrong and then deliberately end-run it. I thought we had an election to stop this sort of thing.
This is one of the things we spent the last 8 years blasting Bush for doing. But in this particular case, the new administration is being less compliant with Congress's will than the Bush administration was!
Less!
I don't know whether to spit or cry. I've always had my doubts about Obama, but in my worst dreams I didn't think he'd try and end run Congress even more blatantly than Bush, in order to give even more money away to the richest Americans with even fewer restrictions and less protection from the taxpayer in terms of ownership stakes.
It's going to be a long 4 years.
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When are American's going to wake up and realize that both the Republicans and the Democrats are parties designed to benefit the corporations that sponsor them? Both parties are filled with criminals and they are both conspiring to screw over the American people. If Obama doesn't do what we want this time, please don't vote for the Republicans, vote for a third party. It is about time to get rid of the two-party dictatorship.
Change we can believe in?
"The crash has laid bare many unpleasant truths about the United States. One of the most alarming is that the finance industry has effectively captured our government", says Simon Johnson, a chief economist with the International Monetary Fund in 2007 and 2008. In an article entitled "The Quiet Coup" in the May, 2009 issue of the Atlantic magazine he (with James Kwak) goes on to say that "if the IMF"s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform and if we are to prevent a true depression, we"re running out of time".
http://www.theatlantic.com/doc/200905/imf-advice
America"s Financial Oligarchy Is Still in Control -
http://news.goldseek.com/GoldSeek/1238998620.php
If you have not noticed the Bush Bailout Plan is what the banks love.
The Banks are balking at Obama's plan which only passed Congress a few weeks ago.
The Bush/ Paulson plan is what they are stuck with to repair if they can.
ANYONE READ THE WHOLE BUSH / PAULSON BAILOUT PLAN ???????
Dump Summers. Dump Geithner. Hire Stiglitz.
A study found that people smoke and drink more in a recession so my smokers choice went from a dollar to two dollars and fifty cents without warning overnight, and the government wonders why people end up putting holes in people. that could be one. Why don't you put a tax on golf they have money and time, dress like there colorblind and use up to much land.
A president working behind the scenes to help the financial folks on wall street.
Seems that the Bush model was not that bad, seeing as obama is following course!
It feels like the Obama Presidency has been hijacked by Emanuel, not unlike the way Cheney hijacked the Bush Presidency.
meet the new boss same as the old boss
the need is new parties and new politics not a snake charmer
I had misgivings about Obama when the primaries started and my support was initially behind Kucinich and then Edwards. Obama is far too centrist and pragmatic for my tastes and is squandering the political capital he's garnered through huge popularity by continuing politics as usual.
My heart sunk when he appointed Summers and Geithner, and then decided to keep Gates. Obama apologists explained to me that these were practical, political appointments and that his leadership would counter-balance these Wall Street and military industrial complex types. Now they tell me it's too early to judge his Presidency. It sure seems to me that he's signaled the direction he's headed. and it sure seems like it's the same old Reagan/Bush/Clinton/Bush era of taking care of the rich and connected at the expense of every one else.
Obama seems determined to please Wall Street.
thats what 14mil in contributions buys you.
I can't say I'm disillusioned because I never had any illusions about Obama in the first place, and its been at least two years since I had illusions about the Democrats in general. But Obama's policies could not be more outrageous. He is transferring wealth to the rich in the form of trillions of dollars. His policies are so pro-Wall Street that the stock market went up (temporarily, I'm sure), and no, the stock market does not represent what is happening to the working class.
It is in times of recession that the power of the capitalists over the working class become stark. The Republicans may seem to be the party of big business, and they are, but they are only one of two. It's only been two months, but like Herbert Hoover he has helped the rich at the expense of the average American and like Ronald Reagan he has begun his presidency by hurting union workers (cutting wages and jobs at GM instead of firing the air traffic controllers). And finally, Obama has continued almost all of Bush's policies, such as bailouts, wars, and detaining people without trial and torturing them. In other words, Obama is a combination of arguably the three worst presidents in history (although there are contenders for those three spots).
As for the legality of Obama's actions, its become more obvious that the "rule of law" only applies when it helps the rich and hurts everyone else.
Let's see what he's changed in 3 months:
Reversed stem-cell research
Signed the Ledbetter bill
Announced an Iraq troop withdrawal plan
Passed a huge stimulus package in which 2/3 of the money are direct spending on America
His Attorney General has said they will stop federal raids on medical marijuana clubs
He has appointed a bigtime pro-union department of labor and signaled his support of EFCA
Changed budget accounting practices to include the cost of both wars
Announced a new Afghanistan/Pakistan strategy which will focus on training and social economic issues
to name a few.....
I do have major concerns about his Wall St. plans as you all do, however I think he is laying the groundwork with business now for the sweeping Union and Healthcare reform on the horizon...i.e. he's buttering up Wall St. and the capital markets now so that the financial infrastructure is still in place for reform and the reform won't be a nuclear disaster to big business because they aren't a "sick patient" anymore.
hear hear! to which i would also add that this article quotes just the one washington post piece about the bailout. why read washington post anymore? it drips with bias and tabloid style suggestions in a way that is scandalous and also, eventually, in my opinion, boring.
The difference here is that there is an actual attempt to create a market where there is none. For the first time the government will prove itself the master of the markets. For the first time we will have resoundingly defeated the notion of free market ideology and shown that markets can be created and sustained profitably by our collective will.
Of course the administration is playing bad cop good cop. Of course an arm of it is seen to be helping business and those that run them make profit.
Wake up and smell good government and clever politics.
See Ian Welsh's Profile
Well, I guess that endrunning Congress is good government and clever politics. I guess that spending money without Congressional approval because you know Congress would never give it to you is a good thing.
If only I had understood these things back when Bush was in charge. I could have saved myself so many outraged blog posts.
No, you knew what W & Co were doing & you wrote the outraged blogs because you can't stand fraud. You''re incapable of apathy & silence. Your blogs will continue to be posted & published for you are a 1st rate reporter. You won't be silent or silenced till you die. To overuse a cliche, it's in your DNA.
Not buying it, good government and clever politics, indeed!
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