The Democrats Angrily Stamp their Trotters
As the country’s recession deepened, the government provided hundreds of billions of dollars of taxpayer funds to rescue the nation’s floundering banks. Now, lawmakers want to know how that money is being used: to increase lending to consumers or spent on executive bonuses, luxury jets, and posh trips to Las Vegas or Monte Carlo.
“We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer,” Sen. Claire McCaskill, D-Mo., recently said from the Senate floor.
“I’m mad,” she said. “Everyone I work for is mad.”
This morning, Rep. Barney Frank, D-Mass., will demand answers from chief executives of eight banks receiving government funds as part of the Troubled Asset Relief Program (TARP) when they come to Capitol Hill to appear before his House Financial Services Committee.
Congress and the Senate, you see, are very angry because apparently the banks abused their trust and didn’t use the money for lending at all. How did THAT happen???:
Neither were the banks required, as Detroit would have been, to get rid of their private jets or supply Treasury with in-depth restructuring plans in exchange for bailout funds….
Rather it is to remind everyone the degree to which the banks have been blessed with a no-questions-asked bailout that will almost certainly generate tremendous taxpayer losses down the road….
But the Troubled Asset Relief Program is open to banks that are both well and sickly. And nobody overseeing the program seems eager to ensure that its funds go only to those institutions that will survive and be able to pay back the taxpayer…
But an audit of the Troubled Asset Relief Program, released last week by the Government Accountability Office, suggests that the program’s holes are many.
For example, the G.A.O. said, Treasury has no way to determine if the program is achieving its goals of increased lending by banks. There also seems to be no monitoring of the banks’ compliance with TARP limits on executive compensation, the G.A.O. added.
That’s right: there was no oversight. Maybe Congress doesn’t read the news:
In his column on Saturday, The Times’s Joe Nocera told about a conference call that he had listened in on recently between employees and executives of JPMorgan Chase. Asked how an infusion of $25 billion of bailout funds would change the bank’s lending policy, an executive said the money would be used to buy other banks.
“I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way,” the executive said. He added that the money could also be used as a backstop in case “recession turns into depression or what happens in the future.”
There was not a word about lending — not to businesses or home buyers or car buyers or students or other consumers. Just the opposite. In response to another question, the executive said that the bank expected to continue to tighten credit.
“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”
Barney, Claire, and all the rest of their friends in Congress and the Senate are “supposedly smart people who look to be totally incompetent”, but if that becomes conventional wisdom, the voters might want to elect someone with more prudent financial management skills (ie, someone who doesn’t simply light piles of money on fire). So they want to put the blame on the very people who they enabled by making a very public show of their outrage.
The big question is “does this fool anyone”. Will the fools who enabled the bailout abuse successfully deflect the blame?
