You have to hand it to Paulson. The man is brazen.
Now, admittedly, he has not asked Congress for the second half of the $700 bailout funds; the Wall Street Journal says merely that he is considering making a request.
Now let us consider;
1. Paulson got the bill passed (remember the timing: it was signed into law October 3) by threatening Congressional leaders that if he didn’t have the funding, the result would be financial armageddon. October delivered that anyhow.
2. Paulson first was going to buy troubled assets, and when that turned out not to be such a hot idea (observers saw it as a back door bank recapitalization, with the added advantage of creating phony inflated valuations for crappy paper, useful for those who did not avail themselves directly of the program), he switched gears and started recapitlizing banks directly and inefficiently, putting $125 billion into nine large banks, some of whom profess they didn’t need it (and that was a feature, not a bug, with Paulson saying up front that he didn’t want to stigmatize banks by singling out the bad ones). Oh, and virtually no strings attached, this was supposed to be user friendly
3. Paulson then renounces the TARP version 1.0 “buy crappy assets” program. Crappy MBS go into a tailspin, necessitating creation of new Treasury/Fed programs to help shore up agency mortgages and asset backed securities, and rescue of Citi.
4. New head of oversight panel, Elizabeth Warren, is already saying that the Treasury is failing about and lacks a strategy.
Put more simply, what pray tell do we have to show for the $350 billion spent so far? Why would you trust this man with another penny, particularly when the terms of the bill put him above the law (although some readers contend that language is unconstitutional). Plus there is no pending emergency to warrant releasing the funds.
But with that lousy fact set, Paulson still has the gall to be noodling making a appeal to Congress for more dough. But then again, those Goldman new business guys were trained to be relentless.
From the Wall Street Journal:
U.S. Treasury Secretary Henry Paulson is debating whether to ask Congress for the second installment of the $700 billion bailout package, concerned about competing demands for the funds and a potentially hostile reaction from lawmakers…
If Mr. Paulson decides to request the next $350 billion, he is expected to do so next week. His hand may ultimately be forced if market conditions continue to deteriorate.
Yves here. What nonsense is this? Since when was the TARP envisioned as a vehicle for propping up “markets” generally? You’d need to add at least another zero to the commitment to accomplish that scale of manipulation.
Back to the article:
Political and practical concerns also color the debate. While Mr. Paulson wants to steer more funds to financial institutions, Congress has its own ideas, including aid for the auto industry and troubled homeowners — two ideas Mr. Paulson has resisted….
The presidential transition is adding to the uncertainty. White House aides approached the transition staff of President-elect Barack Obama two days ago and talked about convening a bipartisan meeting, including congressional leaders, to discuss the next installment, according to an Obama aide. The Obama staff was noncommittal and offered little advice beyond insisting that more money be directed toward direct mortgage assistance. “We’re not in the lead here,” the aide said.
On Capitol Hill, there is little appetite to grant access to the second $350 billion. The skepticism that almost torpedoed the original legislation in September has turned into full-blown revolt amid distrust over implementation and frequent changes to the program.
“Paulson is a big part of the problem because they don’t have a coherent plan,” said Rep. Virginia Foxx (R., N.C.).
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So Mrs. Smith, what should they do with the remaining 350 billion?
Just curious…
You forgot point 5… CBO report issued today says bailout is totally lacking in appropriate oversight
TARP would have done more good if they just hired guys to shovel 700 Billion out of random office windows. That money is never coming back and Paulson knows it.
‘CBO’ what a hogtied agency. The Treasury said it wanted full discretion with immunity in the original 3 page request. Tell us something we don’t already know.
History tells us that we just need some bad days on the stock market, another big bank going down the tubes, and Paulson and the press screaming, “Help!”, to get Congress to give them the $350bn, and more.
Paulson has one main job for the republicans before he hits the road and that is too make damn sure every penny of that gets spent before W leaves office.
Main St, not Wall St, is where future stimulus spending must be directed. We have got to move beyond “no banker left behind” and begin to provide vehicles of liquidity directly to the real economy. Banks hoarding cash to cover looming CDO / CDS shortfalls will NOT stimulate broader economic recovery.
A deep recession or borderline depression is looking increasingly inevitable. What to do under these circumstances? The debate (and action) must move beyond the rhetoric of saving the financial economy. It seems to me that from where we currently stand, the best option (from a number of very bad alternatives) is to explicitly assist one or two major banks only, let the weaker Wall St banks “do a Lehman” (accepting the counterparty cross-default that this might bring), and to conserve all the remaining gas in the tank on helping the real economy (and real people) through the looming period of economic depression.
Finally, focus any remaining funds on building infrastructure and re-tooling the economy to fight the battle of tomorrow, not the battle of the current era (1980-2008) that is already lost.
Potential link anyone…
Paulson requesting extra cash
GS and MS Q4 results expected to be bad – very bad!
Think Paulson has realised the situation is dire
Paulson is running America. Into the ground. But hey, he’s still running it.
I believe that the government PREFERS Depression over transparency. I believe that the government and its agents and cohorts and lobbying arms would rather watch the world suffer through a decade-long depression than have the truth be known about what REALLY exists in those vaults and on those hard drives. The major players in this game (Paulson, Bernanke, Bush, Fuld, Pandit, Roth, Auld, et al) feel they have MORE to lose if the truth comes out about their illegal, fraudulent dealings than they do if the world loses one tenth of its population (some 750 million lives) as the direct result of a deep and lasting economic Depression.in this case, economic Depression is seen by the powers-that-be as the lesser of 2 evils. In their warped minds, t’would be worse to be outed as liars and thieves and cheats and criminals—and suffer at worst a few years in a minimum security country club of a prison—then to watch the world descend into chaos.
Why don’t they just use Fanny and Freddie to help homeonwers in trouble by lowering their interest rates? Lower payments, less defaults. Of course, that doesn’t help those who don’t have a job. Nor, does it give the banks more money.
“In the hole” homeowners are just another example of our collective rampant consumption coming to a screeching halt. The best phrase lately is “excess production”. Fortunately the credit crunch has forced a unilateral belt tightening. Paulson needs to return the balance of the tax dollars. How many differnt brands of toothpaste will fit in your medicine cabinet anyway? Let all those unemployed service sector people grab a shovel to help with the infrastructure and do something productive with their lives.
Bruce of Atlas Resources
(ne:Atlas Shrugged)
Well, Hank Paulson got the Social Security funds after all. This is a breed of Cat that we all have feared since we were boys. Big brain, big mouth, rich family.
Well, some of us have grown a pair in the interim.
I do not believe this man or the organizations he represents, have the interests of American people at heart. He is not interested in my father’s welfare. My Teamster Father (Chief Negotiator) was shot in the face in WWII defending and building our great society. Hank Paulson ( the chicken hawk Bush administration) or the academic recipients of my Father’s life efforts to create a living wage society do not understand the source of my country’s wealth.
I laugh at the little men we are about to send into history. These pigmies cannot defeat this great nation.
I know many people that are not as smart, mathematically, as me and definately not as educated.
Yet, when I have the chance to see them on the street, my spirit soars because I love them. I love them because they advise me on all manner of life issues that I overlook. They are not fools because they cannot comprehend or endeavor to be a wealthy one like me. They are simply wonderful because they are wiser in matters of life and look to guys like me to be the siren and the organizers. That is my contribution.
Coverage for the grifters seems to be coming from the “Rovian” idea that somehow the American people are psychologically deficient for joining the con gaim and embracing ninja loans.
Once upon a time, the gov was an advocate for the every day people in America.