Bloodthirsty Liberal

I mean that literally and figuratively:

We supported TARP to deal with toxic bank assets and resolve failing banks as a resolution agency of the kind that worked with savings and loans in the 1980s. Some taxpayer money was needed beyond what the FDIC’s shrinking insurance fund had available. But TARP quickly became a Treasury tool to save failing institutions without imposing discipline (Citigroup) and even to force public capital onto banks that didn’t need it. This stigmatized all banks as taxpayer supplicants and is now evolving into an excuse for the Federal Reserve to micromanage compensation.

TARP was then redirected well beyond the financial system into $80 billion in “investments” for auto companies. These may never be repaid but served as a lever to abuse creditors and favor auto unions. TARP also bought preferred stock in struggling insurers Lincoln and Hartford, though insurance companies are not subject to bank runs and pose no “systemic risk.” They erode slowly as customers stop renewing policies.

TARP also became another fund for Congress to pay off the already heavily subsidized housing industry by financing home mortgage modifications. Not one cent of the $50 billion in TARP funds earmarked to modify home mortgages will be returned to the Treasury, says the Congressional Budget Office.

As of the end of September, Mr. Geithner was sitting on $317 billion of uncommitted TARP funds, thanks in part to bank repayments. But this sum isn’t the limit of his check-writing ability. Treasury considers TARP a “revolving fund.” If taxpayers are ever paid back by AIG, GM, Chrysler, Citigroup and the rest, Treasury believes it has the authority to spend that returned money on new adventures in housing or other parts of the economy.

…

Treasury and the Fed would prefer to keep TARP as insurance in case the recovery falters and the banking system hits the skids again. But the more transparent way to address this risk is by buttressing the FDIC fund that insures bank deposits and resolves failing banks. The political class has twisted TARP into a fund to finance its pet programs and constituents, and the faster it fades away, the better for taxpayers and the financial system.

Amen to that. But this administration is not about using existing programs (FDIC, Medicaid); it’s about funneling hundreds of millions of dollars to favored industries and companies. And punishing the unfavored.

On a related note, I wonder if it’s just coincidence that the one automobile company that didn’t take a penny of bailout money is about to turn a profit?

Indeed, Ford has managed to gain momentum during this historic recession. It has distinguished itself as the American automaker that proudly passed on taxpayer assistance. Through the first half of the year, Ford even eked out a profit of $834 million, although much of that was because of special onetime charges.

…

During the past two weeks, at least three Wall Street analysts have raised their estimates for Ford Motor Co.’s third-quarter financial results, with one, JP Morgan’s Himanshu Patel, estimating that Ford would report a profit of 16 cents per share for the July-September period when it reports results next Monday.

Some days I can’t tell if the paper I hold in my hands is the Wall Street Journal or The Onion.

Take today, for example. Front page article titled Geithner Vents As Overhaul Stumbles. I’m sorry that I can’t link it, but here’s a sample of the surreal world of today’s White House:

“Friday’s roughly hourlong meeting was describes as unusual, not only because of Mr. Geithner’s repeated use of obscenities, but because of the aggressive posture he took with officials form federal agencies generally considered inependent of the White House.”

Who did he swear at? Chair of the Federal Reserve, Ben Bernanke. Securities and Exchange Commission Chairman, Mary Schapiro. FDIC Chairman, Sheila Bair.

I’m reminded of Barack Obama’s remark about the fact that, as a youth, Rahm Emmanuel lost part of his middle finger in an accident. “It rendered him practically mute”.

Again, sorry I can’t link, but pick up a copy of the Wall Street Journal today to get a sense of Your Government.

You will also learn about how the Cybersecurity Chief (or is it Czar?) has quit. And how the Counsel might get canned.

Nice bunch. Classier than the Bushies, don’t you think?

- Aggie

BTL Updates:

Michell Malkin notes that FU is the default mode in the Obama White House. Sounds like Obama and Dick Cheney are closer cousins than they realized!

Okay, Vigilant Reader Judi really needs to find something to do with her time. Until that tragic day comes, however, we are blessed that she sends us links to interesting—and hysterical—stuff:

I bet Tim Geithner is a great guy to have a beer with—as long as he’s buying. But other than pouring free money into the coffers of the big banks (whose profits have amazingly skyrocketed as a result), what exactly has he done for the economy?

Even the supposed good news isn’t all that good when you look at it:

Alan Lancz, money manager at Alan B. Lancz & Associates, said the GDP report signaled the economy was improving, but he worries that investors are getting ahead of themselves and buying stocks as if the economy will rebound quickly off the bottom.

“The good news is it’s heading in the right direction and the bad news is the higher the market moves the more it’s discounting a V-shaped recovery,” he said.

…

The GDP report is the strongest sign yet that the recession is winding down. However, the Commerce Department revised the first-quarter GDP figure much lower, saying economic activity tumbled 6.4 percent. That is the worst quarterly reading in nearly 30 years.

The latest report also said consumers cut spending by 1.2 percent in the second quarter, after a 0.6 percent increase in the first quarter.

Investors have been looking to consumers to help lead the economy out of a recession. Spending has been cut as consumers continue to worry about jobs. The unemployment rate is expected to move higher after hitting a 26-year high of 9.5 percent in June.

“We’re still not in very good shape in the employment part,” said Steven Stahler, president of the Stahler Group in Baton Rouge, La., adding he doesn’t expect to see consumers leading the country of out recession soon.

Maybe the economy is bottoming out, but the next unemployment report is going to make that hard to sell. The statute of limitations for Blaming Bush is perilously close to running out. Soon, there will be lots of Obamavilles—shanty towns and tent cities reminiscent of the Hoovervilles of the Great Depression—blotting the landscape.

Thank God for President Obama. Without his “stimulus” package and “saved” jobs, think of the mess we’d be in:

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

…

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Fair-minded Americans wanted to give President Obama a chance. They didn’t like Rush Limbaugh’s (or my) rhetoric, rooting for his policies to fail. But it looks like that is what’s happened, whether we like it or not.

Strange that an administration so intent on creating jobs (or at least claiming to), can’t create even one where it might count:

Rick Wagoner is still on the Government Motors payroll, and Tim Geithner is still unable to staff the Treasury or get his programs running: These geniuses are bouncing around like the Thing One and Thing Two of the new American corporatism, a matched set.

…

Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department’s top ranks. But some of the officials also cite the Treasury’s ad-hoc management, which is dominated by a small band of Geithner’s counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.

Just call him Barack Hussein Brezhnev.

When we Bloodthirstani criticize President Obama, we can be (and are!) dismissed as knuckle-dragging troglodytes. Fair enough—except for Aunt Agatha, who would never drag her knuckles, as doing so might chip a nail.

But what about this fine example of homo gyno erectus?

Until last year, Harvard Law School professor Elizabeth Warren was perhaps best known for her writing on bankruptcy and consumer finance. But last fall, she was appointed chair of a newly created Congressional Oversight Panel, which is charged with keeping tabs on the $700 billion bailout of the financial sector - an effort formally known as the Troubled Assets Relief Program.

Q: You’ve been quite critical of the Treasury. What troubles you most about what you’re getting and what you’re not getting?

A: There’s no discussion of the overall policy. Instead, there are specific programs that are announced, and from that, it’s necessary to reason backwards to figure out what the goal must have been. It’s like a “Jeopardy!” game. If this is the answer, what was the question? It’s frustrating because without a clearly articulated goal and identified metrics to determine whether the goal is being accomplished, it’s almost impossible to tell if a program is successful.

Q: Do you have a clear sense of what the overall TARP plan at this point is supposed to do? Are you capable of summarizing what it’s supposed to be doing?

A: No. And neither is Treasury. Treasury has given us multiple contradictory explanations for what it’s trying to accomplish.

There’s a major problem and a minor problem. The minor problem is documentation. I’ve spent four weeks now looking for someone who can give me the details of the stress test so that we can do an independent evaluation of whether the stress test is any good.

We get: “someone will call [you] right back.” Only the call doesn’t come.

The major problem is that Treasury has not articulated its goals. And without that, we can’t have a robust debate about whether they’re headed in the right direction; instead, we’re stuck with this more technical argument about the implementation of the [Term Asset-Backed Securities Loan Facility] or the details of the Capital Acquisition Program. And that misses the central question of, should we be subsidizing failing banks or liquidating them? When we acquire capital, should we exercise more control over the institutions that take the money or less control? Those are the central policy issues that the American public has a right to participate in.

Can I get an amen?!

Who do you trust—someone like Elizabeth Warren, or Lonesome Tim Geithner, who, as far as I know is still holed up in Treasury like some Howard Hughes recluse?

Give that feline fatality a job!

It’s not like Tim Geithner can afford to lose any of the few officials who are actually working at the Treasury Department with him, but last night, he put one on leave.

The acting director of the Office of Thrift Supervision has been put on leave pending a review of the agency’s role in the backdating of capital infusions by some banks, the agency said Thursday evening.

OTS said in a surprise statement that Scott Polakoff, who has been serving as acting director of the OTS, would be replaced by OTS Chief Counsel John Bowman during the review by the Treasury Department.

Office of Thrift Supervision: do they count paper clips and stockpile scrap paper?

Not exactly:

When Ben Bernanke told the Senate Budget Committee that American International Group (AIG) “exploited a huge gap in the regulatory system” and that “there was no oversight of the Financial Products division,” it seemed to make sense. The Federal Reserve Chairman went on to say, “This was a hedge fund basically that was attached to a large and stable insurance company.”

If nobody was keeping an eye on them, well no wonder it blew up.

But it turns out Mr. Bernanke was not quite accurate when he said “no oversight.” He made that statement on March 3rd.

…

“We were clearly responsible as a consolidated regulator for FP,” says Polakoff, and adds, “We, in 2004, should have taken an entirely different approach than what we wound up taking regarding the credit default swaps.” By now, the term credit default swap is practically a barbershop term, but basically it’s just a sort of insurance policy on another financial product like a mortgage-backed security (often stuffed with foreclosed mortgages, as we have all learned to our sorrow).

So when Mr. Polakoff says they should have taken a different approach, what he’s really saying is that the OTS regulators weren’t sophisticated enough to realize that FP was heading for BIG trouble. And why should they have been that prepared? OTS mostly regulates S&L’s which generally take deposits and then make loans for houses and other purposes. Would you expect these civil servants to really understand the risks attached to derivatives that are designed by Math PhD’s to play the odds on pieces of paper that “derive” their value from a mortgage backed security that can’t be valued itself (except maybe by another math nerd).

Who hasn’t backdated the odd multi-million dollar bank draft once or twice?

Or was he canned for speaking truth to power? It is certainly true that these derivatives are beyond the understanding of mere mortals. Why fire him for that? Why not just blame Bush, which is the default position of this administration for everything—and in this case might just be true?

You know who Lonesome Tim Geithner, holed up in the empty halls of Treasury, reminds me of? Remember the Once-ler from Dr. Seuss’s The Lorax?

Not again!

I really have to delete my Aura Cristina Geithner files (but who has that much time?)

Besides, she appears to have more professional colleagues than this guy:

[T]oday’s scoop on the plan from Tim Geithner and Barack Obama on how to fix the economy. To no one’s great surprise, it involves more regulation and intervention by the government, but the only thing clear about it is that Geithner and Obama still don’t have specifics.

Officials said the proposal would seek a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.

…

And to protect consumers, it will call for federal standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules.

…

The big splash for this story was that it showed the Obama administration going after executive pay, even in areas where government regulation doesn’t reach now. However, a closer look at the Times article shows that the Obama administration has no idea how it will do it, where it will go, or even if it wants to take that leap in any real way:

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

In other words, on the 62nd day of his administration, President Obama and Lonesome Tim Geithner haven’t a freakin’ clue what to do, except, probably, to nail wealthy executives to the cross.

The only consistent lesson in the entire economic breakdown we’ve been living through is that government intervention—be it from Barney Frank, Chris Dodd, Henry Paulson, Tim Geithner, et al—leads to ruin.

I suppose I should amend that to say that governments (and their central banks) have a role to play, just not the one they’ve been playing.

The Maimonides of Michigan proves right again: “A government big enough to give you everything you want is a government big enough to take from you everything you have.”
Presidential address to a joint session of Congress (12 August 1974)

“A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large troubled companies not now regulated by Washington, like insurance companies and hedge funds.

That proposal would, for instance, make it easier for the government to cancel bonus contracts like those given to executives at the American International Group, which have stoked a political furor. Under the proposal, the Treasury secretary would have the authority to seize and wind down a struggling institution after consulting with the president and upon the recommendation of two-thirds of the Federal Reserve board.”

(Of course, Ford also said there is no Soviet domination of Eastern Europe.)

You’d think Congress would have learned its lesson not to grant enormous executive powers to mere Treasury Secretaries—but then when has Congress ever learned anything?

We used to employ the term “czar” (”tsar” to crossword puzzle aficionados) ironically to appointed heads of certain government initiatives. But now we mean it.

All hail Czar Timothy I!

Dang! Sorry, wrong Geithner.

Here we go:

You’re in good hands with the all-powerful state.

Where the misses just keep on comin’:

To put these numbers in context, bear in mind that last year’s deficit of $459 billion was the largest on record.

In a new report that provides the first independent analysis of President Obama’s budget request, the nonpartisan Congressional Budget Office predicted that the administration’s agenda would generate deficits averaging nearly $1 trillion a year over the next decade — $2.3 trillion more than the president predicted when he unveiled his spending plan just one month ago.

And while Obama would come close to meeting his goal of cutting the deficit in half by the end of his first term, the CBO predicts that the nation’s annual operating deficit would never drop below 4 percent of the overall economy over the next decade, a level administration officials have said is unsustainable because the national debt would grow too rapidly.

By the CBO’s estimate, for example, the nation’s debt would grow to 82 percent of the overall economy by 2019 under Obama’s policies, compared with a pre-recession average of 40 percent…

Last year’s deficit was the largest on record—but is half of what the average will be for the foreseeable future.

Got that?

And the Secretary of Insolvency can’t keep his dates straight:

A journo asked Gibbs about the Geithner date discrepancies (March 10? March 3?) Gibbs replied, and I quote: “Uhhh…uhhhh…uhhh…uhhh.”

…

Another journo asked why Gibbs himself used the erroneous March 10 date that Geithner is sticking to even now despite the House hearing video that exposes that lie.
More deflection and uhhhs.

Sounds like Obama without his Teleprompter.

Speaking of which:

You think you’re outraged?

Ha! You’re just ruffled, miffed, perturbed compared to my outrage. What I got—now, that’s outrage!

Okay. We get it. Every politician in Washington wants to show They Care by bashing AIG. Which almost all of them agreed to bail out. Repeatedly. But never mind all that.

This, however, is just too much:

Iowa Sen. Charles Grassley suggested on Monday that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.

…

“I suggest, you know, obviously, maybe they ought to be removed. … But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.

Bob Owens points out that Sen. Grassley took $26,250 from AIG in 2007-2008 alone. Is he ready to take a deep bow, too?

As long as we’ve got the courtroom booked, may I suggest a few other defendants for these show trials? Geithner, Paulson, Bernanke? Any and all members of Congress or either Administration who felt there was no time to waste, and that we should spend first and ask questions later?

I’ve already observed that the outrageous money in question is an outrageous 0.097% of the overall bailout of AIG. If we expend all our outrage now, will there be any outrage left for our children when they grow up and see the outrageous debt their guileless, gullible parents left them?

UPDATE
D’oh! How could I have forgotten?

Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group bonus recipients so the government could recoup the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.

While the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009,” which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law.

Also, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.

My friends, no one loves this country more than your humble correspondent. But it’s time you cut New England loose and went on without us. Dodd, Kennedys, Kerry, Frank, Sanders, Leahy, Snowe, Collins—they’ll just slow you down. Maybe a house divided cannot stand—but a house with these lardasses weighing you down will collapse.