SUCKLING THE GOVERNMENT SUGAR TIT
With the battle cry of “Too Big to Fail!” corporate and industry lobbyists are swarming the Treasury Department, looking to get a bite of that $700 billion pie the government so kindly left on the window sill to cool.
It’s a goddamn free for all - as in free money for all - and the predatory instincts of the well heeled hired guns who make their living grasping the taxpayer by the neck and shaking until the cash pours out of us are on full display.
They call it the “Troubled Asset Relief Program” or TARP and of that $700 billion authorized by Congress, the Treasury Department has handed out about $290 billion of it - and not all of it to who Congress intended it to go to.
One of the problems is that Congress decided to give Secretary Paulson almost unlimited discretion in deciding who should get the goodies. Big mistake. Once word was out on the street that absolutely free money was to be had by anyone “Too Big to Fail,” the wolfpack began to clog the halls of the ancient Treasury building, slinking from office to office, looking for a piece of the action.
Apparently, the only criteria necessary for receiving a diamond studded, 24 carat, mink-lined gift from the taxpayer was the degree of shamelessness on the part of your lobbyist - and their ability to knee walk in supplication to Paulsen’s office:
The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.
The lobbying frenzy worries many traditional bankers — the original targets of the rescue program — who fear that it could blur, or even undermine, the government’s effort to stabilize the financial system after its worst crisis since the 1930s.
Among the most rattled are community bankers.
“By the time they get to the community banks, there may not be enough money left,” said Edward L. Yingling, the president of the American Bankers Association. “The marketplace is looking at this so rapidly that those who have the money first may have some advantage.”
Adding to the frenzy is the possibility that the next Congress and White House could change the rules further. President-elect Barack Obama has added his voice by proposing that the struggling automakers get federal aid, which could mean giving them access to the fund — something the Treasury secretary, Henry M. Paulson Jr., has resisted.
Don’t have yours yet? Me neither. What are we doing wrong? Maybe we should talk to the Commissar:
Then there is the National Marine Manufacturers Association, which is asking whether boat financing companies might be eligible for aid to ensure that dealers have access to credit to stock their showrooms with boats — costs have gone up as the credit markets have calcified. Using much the same rationale, the National Automobile Dealers Association is pleading that car dealers get consideration, too.
“Unfortunately, I don’t have a lot of good news for them individually,” said Jeb Mason, who as the Treasury’s liaison to the business community is the first port-of-call for lobbyists. “The government shouldn’t be in the business of picking winners and losers among industries.”
Mr. Mason, 32, a lanky Texan in black cowboy boots who once worked in the White House for Karl Rove, shook his head over the dozens of phone calls and e-mail messages he gets every week. “I was telling a friend, ‘this must have been how the Politburo felt,’ ” he said.
Except the Commies came by their socialism honestly. Here you have a bunch of thieves lining up for it:
The Treasury set a deadline of Friday for institutions to apply for capital investments, which has meant a grueling few weeks for already overworked officials like Mr. Mason.
“Jeb is like the customer service agent at Verizon when the power lines go down,” said Robert S. Nichols, president of the Financial Services Forum, a trade group for big institutions like Citigroup, Fidelity and Allstate Insurance, some of which have received federal money.
Not exactly a customer service agent. They’re more likely to take your money rather than hand it out.
Still can’t get on the gravy train? There’s always Plan B: When in doubt, hire a former candidate for president of the United States to do your schmoozing for you:
Law and lobbying firms that specialize in government contracting fired off dispatches to clients and potential clients explaining opportunities in the new program. Capitalizing on the surge of interest, several large firms, including Patton Boggs; Akin Gump; P & L Gates; Fried, Frank, Harris, Shriver & Jacobson; and Alston & Bird, have set up financial rescue shops.
Alston & Bird, for example, highlights its two biggest stars — former Senator Bob Dole and former Senator Tom Daschle. Mr. Dole “knows Hank Paulson very well” and has been “very helpful” with the financial rescue groups, said David E. Brown, an Alston & Bird partner involved in its effort.
“And of course, Senator Daschle is national co-chair of the Obama campaign,” Mr. Brown added, noting that because Mr. Daschle is not a registered lobbyist, his involvement is limited to “high level advisory and strategic advice.”
In addition to the banks, savings and loans, financial services companies, insurance giants, and any corporation that can redefine itself as being either a crazy uncle or poor cousin of one of the above, there is also Detroit seeking to be rewarded for designing ugly cars that no one wants and that get less gas mileage than the Space Shuttle. It appears that no level of failure, no limit on incompetence and stupidity, will stay the government from handing out cash to the unworthies, the profligates, the dimwitted sots who run American corporations.
And of course, we hear the tocsin sound among Democrats, calling the faithful to class warfare as an effort is still underway to find some means of making the rest of us pay for the stupidity of those who got tangled up in the sub prime mortgage mess.
“Too Big to Fail!” also means “Too Big an Idiot to Fail!”
“I’d like to see them use more of the money in TARP to help homeowners,” said Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee. “I think we’ve given them more authority than they have used.”
To be sure, the program announced on Tuesday by Fannie Mae and Freddie Mac could lead to significantly lower mortgage payments for several hundred thousand people facing foreclosures.
The program would be open to people who are at least three months delinquent on mortgages that are either owned or guaranteed by Fannie Mae or Freddie Mac. The goal would be to reduce the monthly payments on all of those loans — by stretching the term to 40 years, or lowering the interest rate, or even lowering the amount of the loan — so that payments would not be higher than 38 percent of a family’s monthly income.
“Foreclosures hurt families, their neighbors, whole communities and the overall housing market,” said James B. Lockhart, director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.
Eureka! Finally, a way to grab some of that bailout money for ourselves. Of course, you have to have a loan through Fannie Mae or Freddie Mac. And you have to not pay your mortgage for a couple of months (How many people who are two months delinquent will simply decide not to pay that third month in order to be eligible for the giveaway?).
But never fear. Help is on the way. And, on behalf of your fellow taxpayers, let me just say that I, for one, don’t mind giving mortgage scofflaws some of my hard earned cash - just as long as you let me spend the night whenever I want and allow me to lay in my hammock in your backyard every once and a while during the summer. I think that’s a fair exchange, don’t you?
By the time all is said and done, I am confident in saying that the government will not make the hard choices necessary to stem the flow of tax dollars to companies who have failed in the market place and now seek to have government reverse that decision and give the risk takers, the gamblers, the deadbeats, and the just plain greedy a second and third chance. Not as long as there are lobbyists who have dollar signs shining in their eyes and the smell of free cash stinking up our Capitol city.
What a spectacle.
All of this insanity reminds me of my one of my favorite Thomas Jefferson quotes:
““I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
- Thomas Jefferson
Comment by Chuck Tucson — 11/12/2008 @ 10:36 am
The mission creep of the bailout is what I find the most disturbing; are we going to be bailing out newspapers and magazines next week, the recording industry in December, and big tobacco (in North Carolina, a certified blue state now!) the month after that? And what about the mailmen?
Like the Redleg in Josey Wales said, “Doin’ right ain’t got no end.”
Comment by Bob W. — 11/12/2008 @ 10:47 am
What a spectacle.
Watching Congress is like watching a routed army, where the soldiers are running to save their individual hides and pillaging the supply wagons as they flee.
I haven’t heard anyone in government saying “Stop!” Is it because they know the citizenry/mob values security over freedom?
Comment by Salt Lick — 11/12/2008 @ 11:08 am
[...] From the get-go of this bailout approach to the frozen-credit debacle which has now metastasized into a general meltdown, it was clear that a basic truth would soon manifest itself - that being that when desperate people smell easy money, they stampede toward it. [...]
Pingback by Bent Notes » Blog Archive » Yoo hoo, Secretary Paulson! Check me out! I’m too big too fail, doncha think? — 11/12/2008 @ 12:54 pm
Seems to me someone in government has a guilty conscience.
Comment by DoorHold — 11/12/2008 @ 1:01 pm
Salt Lick,
“I haven’t heard anyone in government saying “Stop!” Is it because they know the citizenry/mob values security over freedom?”
I’m guessing that it’s as simple as some of that money coming right back to them in the form of campaign contributions. Just a thought.
Comment by Chuck Tucson — 11/12/2008 @ 2:07 pm
I think we need a bail out for underperforming blogs. Just think how many people will be thrown out of work if I have to cancel my blog. Okay, none. But it’s the principle of the thing! The principle being, “Where’s mine?”
Comment by michael reynolds — 11/12/2008 @ 3:37 pm
Let the failed businesses die quickly, so that we may recover faster.The new administration will not only make sure we have a full blown depression, but they will make it linger for years like a nasty relative you just cant throw out.
Comment by DAVE IN SOCIALIST CHICAGO — 11/12/2008 @ 3:43 pm
Rick
I have run to the mailbox every day since election day, but still no check from the government to make my house payment for me. Checked my gasoline credit card, every charge was still on it. Guess someone found out I did not vote for Obama.I am not behind on my house payment, and not under water yet, and since I live in Texas, probably won’t be except in the case of a depression, then we really all are in the same boat.
I guess I am in a minority around here, since I was originally for TARP because I have been in and out of the stock market for years, I read constantly about stocks and bonds, and have many friends in the financial industry, and I truly believe that the market was set for a free fall much, much worse than what we have seen so far, and much more rapidly than what we have experienced, if something wasn’t done.
However, as I began to learn more and more about the freaking mess the financial sector was in as a result of the quantum theory financial wizards uses of CDOs, swaps, insurance backed securities, and the fact that the ratings agencies joined in the game like a bunch of conventioneers chasing a two dollar hooker, I realized that the toxic debt buying scheme was not going to work. The fact is, Paulson panicked, and made some risky, and now foreseeable, assumptions. One of the biggest, and dumbest, was that he could place a value on the toxic assets. Since the banks still continue to avoid transparency at all costs, and because it would take a character smarter than the one in Good Will Hunting to figure out what is what, there is simply no way to determine what those assets are worth, and more importantly, what should be paid for them.
Subsequently, he promptly over-paid for what he got by injecting money into the banks. And forgot, purposely or innocently, to remember to place a sufficiently dragonian policy on the banks to begin lending the money, instead of hoarding it.
Now, we have companies like American Express, with very little exposure directly to the sub-prime/no doc liars loan mess, deciding they want to be banks for the sole purpose of sticking their heads into the public trough. When they get the money, they need to change their name to American’s Express. Or better yet, America’s Mess.
Comment by Mikeyslaw — 11/12/2008 @ 4:28 pm
When Paulson said he needed to set up a reverse auction for all the troubled mortgages so a market for them returned, and institutions could cash out their losses, Rick waivered and withheld support. Paulson, Bush, Pelosi and Reid all said a plan would be put together. The markets trusted those assurances. Rick waivered. I chastised Rick for his stuck posture, and referred him to Paul Samuelson who favored creating a market to let institutions cash out their losses. Well Paulson is screwing us all; Rick was right all along. Institutions are getting sweetheart equity boosts from Uncle Sam and never mind about that orderly reverse auction of toxic assets. Rick, I owe you a round of drinks. Paulson, since you’re gambling on the public tit, why not help out Las Vegas Sands Corp/Venetian/Palazzo and get some comps for all of us.
Comment by mark30339 — 11/12/2008 @ 10:08 pm
This display/spectacle/fiasco feels a bit like a giant piñata, except these industries didn’t even have to take a meager swing at the cash-stuffed prize. Congress cracked it open themselves, dumped it on the floor, and the kids have come running like…well…like kids do when they see free candy on the floor.
The whole thing is becoming a disgusting mess.
Comment by sota — 11/12/2008 @ 10:35 pm
This situation is absurd.
Perhaps we can all agree that something should be done. I am not intelligent enough to figure it out. How can we get the biggest bang for our bucks? I hope the last gasp of the Bush administration will not exacerbate the situation.
Privatising profits and socializing costs: welcome to lemon socialism!
Comment by bobwire — 11/12/2008 @ 10:54 pm
All this to keep a Golliwog in the Chocolate House for 4 years?
Nah! Let’s bring the ‘Ides of March’ forward real quick this time round.
Comment by Mark Antony — 11/12/2008 @ 11:40 pm
I suspect the next few generations are not going look at ours in a good light. No, let me ammend that, they will be royally pissed off. Their questions will fall into three basic categories:
1. How many mortgages did you take out on the place?
2. What the hell did you do with all the equity?
3. Did it ever cross your minds that we have to pay that debt?
The greatest generation is not what we will be known as.
Comment by Allen — 11/13/2008 @ 1:00 am
Lobbying is done under the Constituional right of citizens to petition the government. Is there anything in the Constitution that allows citizens to hire people on their behalf to petition the government? Is lobbying even Constitutional?
OK, I’m dreaming but the question remains.
1st Amendment couldn’t be clearer - citizens have the right to “redress greivances” - the very definition of a lobbyist in most cases. If an action by government - either through commission or ommission - is damaging, you have every right to hire a lobbyist to seek redress.
ed.
Comment by still liberal — 11/13/2008 @ 10:05 am
I recently had a sit down with my Congressman. (Don Manzullo - R Ill)
I specifically asked him how much influence lobbyists have with him. He said that he would never find out about some issues, if not for lobbyists. He said, “how else am I supposed to find out what’s going on?”
I fully understand the role of lobbying, but Manzullo didn’t seem to want to differentiate between someone who is a paid corporate lobbyist, and someone, like me, who takes my concerns directly to him. I also kindly suggested the he read a newspaper or some news on the web from time to time to stay informed. He indicated that he had little time for this.
So, the question is then, is there a difference between me talking to him, and a paid corporate lobbyist talking to him? On the surface no, I guess not. But, I don’t have the power do pull in campaign contributions on the scale that a corporate lobbyist does. I would think that would have some definite effect on who he would listen to, even if it is subconscious.
I dunno. I have mixed feelings on the issue.
Comment by Chuck Tucson — 11/13/2008 @ 11:48 am
Ugliness in the name of charity.
“Too big to fail?” Donald trump is suing folks he owes huge amounts of money to to “restructure” what he owes them, or he’ll default. A smart move he learned on the street…obviously.
Our representatives haven’t learned anything from us.
When will we learn?
Comment by P. Aaron — 11/13/2008 @ 6:12 pm