Bailout Money Goes Rogue
Yesterday’s Washington Post had a chilling article about the trillion dollars in bailout money. It is, lacking a better word, rogue — there is no real oversight committee or audit rules in place. The key watchdog roles remain unfilled.
WaPo:
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.”
Why am I not surprised at all by this?
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Source:
Bailout Lacks Oversight Despite Billions Pledged
Watchdog Panel Is Empty; Report Is Unfinished
Amit R. Paley
Washington Post, November 13, 2008; A01
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/12/AR2008111202846_pf.html
November 14th, 2008 at 8:27 am
If this were Lord of the Rings, we just met Gandolf. Lots more pain, mistakes, bankruptcies, blowups, poor earnings, low monthly retail numbers, a horrid christmas season, the ripple in foreign, emerging economies.
S&P 725, +/- 25 (april / may 2009)
November 14th, 2008 at 8:31 am
Oh. And I forgot one little detail…the housing bottom. Ha. See, all this second hand crack smoke has me forgetting little details.
November 14th, 2008 at 9:09 am
You really expected any supervision. We have lame ducks in every corner of government. Congress people who have have been voted out and have no interest in doing anything, an administration whose entire reasoning has been lack of oversight, and bankers who are trying to manipulate the whole thing to get the best deal for them. Well perhaps when the new administration gets seated things will change…hope spring eternal.
November 14th, 2008 at 9:46 am
Nothing surprising there..why they didn’t make the distribution of the bailout money occur AFTER the watchdog post was filled is beyond me.
November 14th, 2008 at 10:01 am
Somewhat off topic - and Barry, I think you should look into doing a post on this - but check out FXP. It closed yesterday just above the 52 week lows.
So this ETF that is allegedly/supposedly:
“UltraShort FTSE/Xinhua China 25 ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the FTSE/Xinhua China 25 Index.”
Is just about at 52 week lows. That would mean the FXI is near 52 week highs. Um, nope, it’s at 26, nearer the 52 week low of 19 than the high of 66.
These ETFs are guaranteed losers.
November 14th, 2008 at 10:13 am
@ TrickStyle
Gandalf in Lord of the Rings
vs.
Gandolf in the Urban Dictionary http://www.urbandictionary.com/define.php?term=gandolf
“to take a guess, or to say i think”
seems pretty apt, we’re all left guessing and thinking “Where’s the money?”
and as Deep Throat advised Bernstein, “Follow the money”
November 14th, 2008 at 11:51 am
It doesn’t surprise me at all. We have too much incompetence in our government.
November 14th, 2008 at 12:05 pm
And even if all of the stars in the galaxy were to line up perfectly, and the Treasury could actually recoup all of the $700B, what would happen then?
New spending programs, of course.
November 14th, 2008 at 12:50 pm
Coming this fall, Government Gone Wild! Look for it in local theaters.
November 14th, 2008 at 1:02 pm
Its Friday afternoon. Treasury has just announced a key oversight attorney. The hearing today, Dennis Kucinich of all people, is very interesting on the arcane subject of exactly how TARP funds can be used to scrub bad loans. The testimony may be helpful to TBP readers. Here is the link:
http://domesticpolicy.oversight.house.gov/story.asp?ID=2276
best to all…
November 14th, 2008 at 1:11 pm
OK…then maybe if this bailout money is being spent without proper oversight, the solution is just throw more money at it….maybe that will bring you a Nobel Prize.
http://www.nytimes.com/2008/11/14/opinion/14krugman.html
Depression Economics Returns
Seriously, the stuff I read this morning make me think this deleveraging will be around for some time. I still am not sure that being an economist is not like being a weatherman…if you predict something, oh, say, that 12 months ago, no economist but Roubini was entertaining even the idea of a drop in GDP, and now, the weathermap has changed and most think down 3% here, at least 1.5% next quarter, and some thing several more quarters after that….happens all the time in this “science”…
Massive layoffs at Java…and just a few months ago, Sun and other tech companies were widely acclaimed as the place to be during a recession, as “everyone” will still need tech…now, as we see how serious this is becoming, no one is still riding that bus.
Will easy money stop insolvency? ….stay tuned……..
November 14th, 2008 at 1:19 pm
Bruce; “Will easy money stop insolvency?”
Actually, it will probably cause it.
November 14th, 2008 at 1:57 pm
All the idiots who supported this TARP deserve all of the waste, mismanagement, and higher taxes that they will get.
Stay tuned for “TARP II” in 2009. (God I hope not).
November 14th, 2008 at 2:25 pm
It’s analogous to the Germans looting the occupied territories before the Allies arrive.
DL:
From what a few Congresspeople have said, it was presented to them as an alternative to martial law when the banking system broke down. If you think in terms of TARP as opposed to the possibility of W having a way to become president for life, TARP may not have looked so bad.
November 14th, 2008 at 4:04 pm
Mike in Nola @ 2:25
“From what a few Congresspeople have said, it was presented to them as an alternative to martial law when the banking system broke down”.
Well then the Congressmen (& women) are suckers.
Of course, we have to “bail out” depositors when banks fail.
And we should “bail out” people who become unemployed (by providing some financial support to them).
But from the long run economic perspective, we don’t need to do a whole lot more.