Bailout: So What’s Wrong with This Picture?

September 22, 2008 – Denver ( – The short answer is…

pretty much everything.

When Ian Welsh at takes a quick look at the draft legislation and finds seventeen problems off the top of his head, you know there's a scam afoot (emphases ours):

  • No one who foresaw the crisis, such as Krugman or Stiglitz, is involved in making the plan to fix it.
  • The man overseeing the bailout is the ex-CEO of Goldman Sachs, a Wall Street Company. He helped cause the crisis.
  • Paulson helped obtain the SEC exemption which allowed brokerages to increase leverage to 60:1 from 12:1.
  • The money is Paulson's to use for buying commercial and residential mortgages and mortgaged backed securities as he chooses. No one has any oversight over him, and he can pay any price he wants to, including face amount of the debt.
  • Courts cannot review his decisions, not can any regulators. He has to report to Congress once every six months.
  • He gets 700 Billion dollars to use as he sees fit, looking after the taxpayer is a "consideration" not a requirement.
  • Bet on that 700 Billion dollars being gone before January 20, 2009. Bet on Treasury asking for more.
  • That is $2,324 dollars per man, woman and child in America
  • There is no bailout for mortgage holders. Banks get bailed out, but not ordinary people.
  • Banks and brokerages made record profits these last eight years. Ordinary Americans barely broke even.
  • In 2007 Wall Street paid itself bonuses equal to the raises of 80 million Americans.
  • Banks bailed out by this plan need make no changes in how they do business.
  • Banks bailed out need not replace the management which drove them into insolvency.
  • Shareholders and bondholders of such banks do not lose a cent.
  • The securities which caused this crisis are still allowed.
  • Expect the 700 billion dollars to increase inflation, especially in oil.
  • Bush is asking you to trust his administration with 700 billion after spending 580 billion on the Iraq war. Do you trust him?

Meanwhile, over at RGE Monitor, London Banker echoes Jeff Koopersmith:

The hypocrisy of the Bush administration criticizing Chavez while defending Paulson and Bernanke should be the stuff of late night stand up comedy. … Stalin couldn’t have drafted a better plan for central control of the global economy after wreaking such havoc and devastation.

And, in today's edition of "See a Pattern Here," let's begin with What Atrios Said:

This is my favorite bit. Well, aside from the whole SEVEN HUNDRED BILLION DOLLARS part.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Then, check out the final paragraph of Glenn Greenwald's must read analysis of the draft legislation:

[T]his authorizes Hank Paulson to transfer $700 billion of taxpayer money to private industry in his sole discretion, and nobody has the right or ability to review or challenge any decision he makes.

Finally, there was the spit-take moment of this morning's Sunday talk shows: on ABC's This Week, Cokie Roberts – yes, Cokie Roberts – clutched her pearls and cited the fact that the draft plan leaves Paulson unaccountable!

Amidst the rising critique of the bailout plan are more than a few good ideas, and WaPo's Sebastian Mallaby cites a couple of sound alternative approaches to tackling the crisis.

If you don't already have your congresscritter's and senators ' phone and fax number on speed dial, now would be a good time to do so and let them know how youo feel about giving Hank "Hacky Sachs" Paulson unitary executive authority over a poorly-conceived bailout.

Crossposted to Synaphaï

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