10/31/2008 05:12 am ET Updated May 25, 2011

For Bailout Analysis, Look Outside The Mainstream

While the political press continues to play with the bright shiny ball that is Who Is To Blame For Everything That Happened Yesterday, I'm picking up key insight on what a $700 billion dollar giveaway really means to the American taxpayer whilst on my lunch break. The truth is out there, Fox Mulder! To wit, with my own emphasis hither and yon:

As Congress continues to debate whether they are going to hand over $700 billion of your money to the wealthy who screwed up Wall Street and the banking industry, you will be relieved to learn that top executives of the bailed-out firms temporarily will be limited to a strict $500,000 a year in tax-subsidized income. Surely you receive $500,000 a year in tax-subsidized income, don't you? Anyway, supposing we assume the bailout is required, here is what bothers me about the plan so far: Taxpayers don't get stock, what they get is warrants that can be exchanged for stock, and nonvoting stock to boot. This means that once media attention switches to the next crisis that everyone will claim in retrospect to have seen coming, the Wall Street rich can quietly lobby to have the warrants never called, thus keeping the entire bag of gold for themselves. Even if the warrants are called, taxpayers get no voting positions -- meaning the boards of directors of the bailed-out firms can do anything they damn please with taxpayers' money.

A week ago, Warren Buffett rescued Goldman Sachs by injecting $5 billion in capital. Did Buffett bargain for warrants that can be exchanged at an unknown later date for nonvoting shares? No: He is not a fool. Buffett gave Goldman Sachs $5 billion in return for senior preferred stock, the kind that votes and also is more valuable than ordinary shares. That is to say, he used his money to buy something. Goldman can now employ the cash to fix its liquidity problems. The United States Congress and the White House should use the public's $700 billion to buy something, namely senior preferred shares. Why are Congress and George W. Bush not simply following the road map laid out on this problem by the smartest investor of our era? Either Congress and the president are a bunch of blithering fools -- or what they actually want is to insure the public's money is never seen by the public again.

You'd think that this sort of laid-bare analysis would be found everywhere, that the merits of these sorts of claims would be what the media would be debating. But you'd be wrong! Where does one have to go to find this sort of analysis and concern? The above was pulled from Gregg Easterbrook's column about football at ESPN!

Someone needs to make a margin call on the traditional media.