Saturday, February 14, 2009

Hypocrits to the hilt

By the measure of nearly any presidency, the passage of a massive, $787 billion stimulus bill three weeks into the Obama administration is a remarkable achievement. The economic analysts I read and listen to say (a) it probably won't prove enough in the long run but (b) it'll certainly help and may at least keep unemployment below 10 percent in what will be a very painful year.

Republicans, meanwhile, are yelling "fire" in a crowded theater. The measure they say will "mortgage our children's future." They repeat this mantra in lockstep on TV talks shows, at press confeerences, and, ultimately, on the news. They also wag a finger and somberly note that they want bipartisanship, but that it has failed here because of Democrats desire to distribute pork back home.

No House Republicans voted for the stimulus. Three blue state Senate Republicans assured passage by giving the measure their support: Arlen Specter of Pennsylvania and Susan Collins and Olympia Stowe, both of Maine. And self-proclaimed "Mr. Maverick," John McCain? He's leading the sanctimonious Republican hand-wringing accusing the Democrats of selling our children's future.

So let's set the record straight. Yes, bipartisanship failed but not for lack of trying by President Obama and not because the measure was laden with pork. I hope the president doesn't waste his time trying too hard to wine and dine the GOP in the future. There is too much work to be done to waste a lot of energy on the party of non-regulation and non-responsiveness.

This is the crowd, after all, that under W. ran up the largest deficit in American history and left the country in the shambles we now find ourselves digging out of. Somehow Republicans didn't worry too much about our children's future when they passed $1.2 trillion in tax cuts while increasing federal spending. They didn't worry about our children's future when they poured upwards of another trillion dollars into waging and supporting a war in Iraq started to stop phantom weapons of mass destruction. They didn't worry about our children's future when they allowed crooks like Bernard Madoff to rip off his clients of $50 billion in the world's biggest Ponzi Scheme or when they stood by while executives at Merrill Lynch awarded themselves 700 $1- million-plus salaries in a year in which the company lost $27 billion.

When the same folks who brought us bankrupting tax policies, the albatross of an unwinnable war and an ethic of unregulated greed now wag a finger of coordinated righteousness, it strikes me as the ultimate act of hypocrisy.

Wednesday, February 11, 2009

It's time to bail out Americans, not their bankers

Would you invest your children’s inheritance in a new-fangled investment scheme on the basis of nothing but talking points? Would you invest your life savings in a mansion after seeing nothing but an architect’s sketch? And, in both cases, would you entrust the supervision of these funds to men and women who had lost oodles of their own and other people’s money already?

That’s sort of what Treasury Secretary Timothy Geithner and the Obama administration seemed to be asking the American public to do on Tuesday. It’s insulting and, frankly, somewhat frightening. From what I read, while we awaited leadership, Geithner trotted out a tweaked version of his predecessor, Hank Paulson’s, reality. While we needed a fresh start, Geithner not only made it easy for the same failed bank officers to stay in place but pushed back efforts to limit their compensation. While we pined for money at the grass roots, to keep banks from foreclosing on American homes at a rate of 10,000 a day, Geithner put off to some undefined future time a plan to help homeowners restructure loans.

Surely, the Obama administration, must grasp this: The American people are not interested in propping up the fat cats of American finance. Nor will they be fooled with smoke and mirrors. Obama was elected to change business as usual. And it sure doesn’t look like TARP2 does.

I’ve always wondered about this “Troubled Asset Relief Program.” Even the name bothers me. Are we relieving the “troubled assets” – and the bankers who made a mess of them? Or are we relieving troubled Americans, lured into bad loans and worse debt by mortgage brokers and bankers who in some cases must have known darn well that the money they handing out could never be repaid in the manner it was supposed to be. If America needs a bailout, why not let Americans have a bailout?

Let’s stop to consider what $700 billion, the amount Congress voted for the financial bailout program during the campaign season, can buy. Using a ballpark figure of 100 million U.S. households, $700 billion is the equivalent of giving every homeowner or apartment renter $7,000. Per family or household. If every American household actually had been given that kind of money, I suspect it would have gone quite a ways toward stimulating the economy. Instead, half that money went to banks, which have hoarded the money. Geithner’s press conference was the roll out how the second half of that installment would be spent. And now there are suggestions the final figure could balloon above $2 trillion. If the United States is going to live off the largesse of Chinese loans – until they’re called due -- can the rest of us enjoy the respite and pay off some bills?

More of the same won’t work. Americans are still waiting for a real plan, with real oversight, real regulation and real chance of some of that money flowing downhill to strapped and increasing desperate citizens. We don’t need trickle down economics 2 -- without the trickle. We’re not economists but we do have a sense of smell. And something still stinks here.

Tuesday, February 10, 2009

Mr. President: Let's clear out the banking dead wood

Let's hope the banking lobbyists aren't still working their magic in Washington. There certainly are signs they could be.

A fascinating story in Tuesday's New York Times suggests that Treasury Secretary Timothy Geithner prevailed over other high-ranking Obama aides who wanted to impose tougher sanctions on banks and bankers seeking more federal bailout money. On the oped pages of the same paper, conservative columnist David Brooks, an opponent of the stimulus plan, praises this bank bailout.

I consider that a bad sign.

I am no economist and the multiplex of multi-billion-dollar numbers thrown around these days often leaves me dizzy. But I do have common sense, and I have always lived within my means. I play my mortgage on time. I don't load up my credit cards. I defer purchases that I don't have the money to make.

That's why I'm angry -- really angry -- at the profligate SOB's of the financial world who seem to think it's their right to drain my children's future and then have the government run to the rescue, no strings attached. And that's why I'm getting equally angry at the government's unwillingness to punish them for their utter irresponsibility.

OK. So the new plan, as President Obama announced last week, will cap top executive salaries at rescued financial institutions at $500,000 a year until these rescued institutions can again stand on their own feet. Now there is tough love -- not.

I'm sure some of these guys will have to sell a yacht or two -- maybe a home or two -- at a loss to get by on a mere $500,000 a year. But I'll be damned if I can understand why the U.S. government is concerned about keeping their stockholders whole. Or why the salary cap doesn't extend beyond the top executives to all executives. Or why Geithner is loathe to clean house and bring in executives and boards not tainted by a run-up in our national debt that could surpass $1 trillion eventually just to keep the banks afloat.

Change, Mr. President, doesn't mean keeping the same shysters at a half mil. Change means doing something different. Free enterprise doesn't mean that if bank executives act like irresponsible fools, they, along with their banks, get a bailout. It means if they are fools, they should be fired.

The crisis we are in was no accident. Banks began giving mortgages with no downpayments and no credible requirements for lenders to show they could ever repay their mortgages. The banks would then sell these loans to bigger banks, who would sell them to Wall Street and so on. I guess it was all legal, but it sure sounds to a layman a lot like Bernard Madoff's Ponzi Scheme. So why then is the government so concerned about keeping these executives and their boards intact and in place?

I smell a rat, or at least a lobbyist.

Yes, I can, though grudgingly, understand why the Obama administration wants to keep the banks from going under. That would pull us down with them. But I cannot understand why the Obama administration continues to protect the self-centered, arrogant, unethical and unbowed executives who have beaten these banks and this country into the ground. (If they haven't exactly fiddled while Rome burns, they have thrown six-figure luxury "retreats" with taxpayer money that was supposed to open up credit markets, but has not.)

President Obama, your popularity remains strong. You should use it to lead the people - and to leave the Republican Party and the lobbyists behind if they choose not to follow. Splitting the difference in an economic crisis is no solution. As you said yourself Monday night, catastrophe could be close behind. This is no time for subtle shifts in a failed system. It is time to be bold.