If Barack Obama wants another trillion or more for toxic-asset purchases, what was the TARP for? The burden is on him and Timothy Geithner to explain why another Wall Street bailout will work when the previous ones have not.
This latest plan would have the taxpayer finance the purchase of troubled assets, opening the door for unregulated opaque entities like hedge funds to speculate with taxpayer funds. This “public-private partnership” might also be called the Obama Hedge Fund Bailout.
When TARP was passed by Congress in October, its purported purpose was to buy toxic assets from banks. Instead, the $700 billion has been used to buy preferred stock in banks, bail out the automakers, and now bail out the automakers’ suppliers. Yet these stock purchases have failed to prevent the deterioration of bank’s capital positions, even as common stock, held by millions of small investors, has been crushed.
Former Treasury Secretary Henry Paulson along with Geithner told Congress that if TARP were not passed, the entire financial system would collapse. The TARP legislation was a three-page bait and switch. If Congress knew how the money would be used, TARP never would have passed.
When Obama took office, roughly half of TARP was unspent, and it was treated as “found money.” Since that time, Obama has used the financial crisis to justify the $787 billion stimulus package, and the trillion-dollar Term Asset-Backed Securities Loan Facility (TALF) program.
The AIG bonuses are the tip of the iceberg. When so much money is divided up in so little time with the eager help of so many special interests, the inevitable result is corruption.
Obama has dismissed concerns about his proposed budget deficit of $1.75 trillion even though the Congressional Budget Office says the deficit will be much higher. And all this has happened before Obama has done a thing about the impending bankruptcy of Medicare and the foreseeable bankruptcy of Social Security.
Obama’s new restrictions on executive pay are a smokescreen to hide the unpleasant reality that closed-door meetings between bureaucrats and financiers have replaced our system of democracy. Obama and Wall Street are putting us in a hole from which we will never climb out.