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It is almost too tempting to pile on Merril Lynch’s CEO, John Thain, the man who stole billions in tax payer funds in order to secretly pay huge bonuses to staffers, after his company lost more than fifteen billion dollars. He had to do this secretly, just days in advance of his company’s takeover by Bank of America because. Just because.
Oh, what the heck. Let’s pile on. In many ways, John Thain reminds me of my ex-spouse. Throwing furniture through walls when angered? Check. Lying? Check. Committing fraud? Check. And then when things look their darkest? Ah, yes. One simply must go on an obscene shopping spree, in Thain’s case, for a million dollars in office furniture. (I still want to see that commode on wheels.) New York’s AG Andrew Cuomo is now investigating the bonus payments as a probable crime. Go, Andy.
Unfortunately for us, John Thain’s obscene behavior was the rule, not the exception. As moronic poster children for greed and self-dealing go, there are other candidates who would do just as well. Alan Greenspan, Robert Rubin, former CITI CEO Charles Prince, Chris Cox, and our Stardust Twins, Ben Bernanke, and Hank Paulson. To put this economic disaster in the simplest possible terms, think of Wall Street as a personal ATM for banking executives. If they made a profit, they paid themselves huge bonuses. If they deliberately drove up values of subprime mortgage-based investments, they paid themselves huge bonuses. If the subprime instruments crashed back down to their natural values, they paid themselves huge bonuses. And, when Uncle Sam came to bail them out with hundreds of BILLIONS in taxpayer dollars, they paid themselves huge bonuses.
Reread the last paragraph and see if you can spot the common thread. To really understand TARP, we need to understand the complex mechanisms upon which Wall Street operates:
Greed. That’s it. That is the only mechanism. We have learned a sorry lesson. Greed alone is NOT good.
When Ben and Hank came to Congress last year, demanding emergency help, they didn’t even try to tell Congress how badly they had misled it or us for the past few years. All Congress needed to know was that the sky was falling and the economy would collapse unless we gave billionaire bankers massive corporate welfare. No strings, no supervision, just give Hank and Ben $700,000,000,000 to play with as they saw fit.
Thanks, Congress. Your Corporate Welfare Program was a huge success. Loans are flowing to consumers again, the car industry is thriving, unemployment figures were never smaller, the housing industry has never been stronger, and mortgage and credit card companies are dealing humanely with the few remaining human misery stories. Best of all, Wall Street’s demand for bankruptcy deform a few years back has made every American confident and secure, knowing that his/her constitutional right is fully protected. (Art.1 Sec. 8) To properly honor Congress, let’s rename Tarp to something much more appropriate:
We have one minor pesky question, though. Where did all that money go?
Think of the fun Danny Ocean’s cohorts could have fun with this question. The hundreds of billions went to banks who promptly did everything EXCEPT begin lending to consumers again. Not one personal bankruptcy, not one foreclosure, not one out of work family was aided by TARP. Instead, our money ended up funding corporate bonuses, billions off-shore investments, unsavory bank mergers, and who knows what else? We can’t find out, because the Stardust Twins refuse to tell us. None of our business where our money goes, apparently.
At least we know who initially got our money, because Rupert’s Wall Street Journal surprises us by keeping one investigative reporter on staff. Here is a fascinating list which shows just how huge and widespread this taxpayer rip-off was:
Our Congress is of little help. No, that’s not right. Congress is smack in the middle of this criminal activity. They passed TARP with little discussion and absolutely no supervision. Maybe they thought we wouldn’t notice. Well, we did. Now watch as Congress projects faux outrage and pseudo-anger at the criminal cabal on Wall – and now Congress tries to redeem its tattered reputation by distancing itself from this multi-billion dollar transfer of our money to the very criminals who created this financial mess. Jesse James would have been proud of Congress. Bank robberies used to involve theft from banks. This one, with Congressional help, has the banks stealing from American taxpayers.
The House Financial Services Chairman, Barney Frank (D-Mass), our Financial White Knight, drafted some legislation that will supposedly save the day, and require stronger oversight. But Barney is part of the problem, not the source of a solution. Where was he when the original TARP was created? Did he really trust Wall Street to act altruistically? Ethically? Or even legally? After the last eight years? Come on, Barney. You are a fraud. Ever hear of Boston Private Financial Holdings? And how did they manage to get $154,000,000 in TARP funds, even though they had zero recognizable assets left? Why don’t you first answer that one, Barney, BEFORE you pretend to be America’s Financial White Knight. Talk about a day late and a dollar short.
Despite Congress’ being asleep for eight years, then spastically reacting to the doomsday threat from the Stardust Twins, we do know where some of the money went. From you and me to Congress. From Congress to Wall Street. From Wall Street to lobbyists. From lobbyists to Congress. Amazing how that works, no? Why don’t we simply bribe Congress ourselves, and eliminate the middlemen?
"Bank of America, whose heavy losses prompted it to appeal to the government for a second bailout this month, spent $4.1 million on lobbying last year, nearly $1 million more than in 2007. The bank spent $820,000 on lobbying in the last quarter, about one-fifth less than in the third quarter. Bank of America is in line to receive a total of $45 billion from the government, including $20 billion committed by the Treasury this month.
"Merrill Lynch & Co., which was acquired by Bank of America Jan. 1 at the government’s urging, spent $1.2 million on lobbying in each of the last two quarters, and $4.7 million for the year, $280,000 more than it spent in 2007. Merrill’s losses last year were another reason why Bank of America appealed for a second injection of taxpayer money."
If it wasn’t so painful, this would be hilarious. Lobbyists bribe Congress with taxpayer money the lobbyists’ clients got from Congress. I am still checking out just how much Uncle Barney got in political donations since TARP was created. If anyone knows for sure, please let me know. But these are mere millions. Wall Street’s bonuses are in the BILLIONS. How can anyone support bonuses to the folks who lost you billions? More importantly, where is our outrage?
Some of our money was stolen directly, some was stolen in more creative ways. The most obvious thieves are the hedge fund and investment bankers who simply took it. Bernie Madoff, America’s Ponzi King, stole $52,000,000,000, a figure that no one can really understand. Other criminals made off with only hundreds of millions. Wall Street’s most cunning criminals were much more subtle, and relied on extremely complex computer aided crimes. Derivatives, swap trades, subprime mortgage instruments – if that much effort and energy had been directed to clean power generation, imagine where we would be today. Certainly not wasting our soldiers’ lives in Iraq.
For the average person, it is hard to conceive of just how big a million dollars is. When you talk about 100 million or more, it becomes even harder to grasp. When you throw 100 BILLION, or a thousand times as much, at Wall Street’s pampered executives, a good portion of which found its way into their pockets, it is virtually impossible to understand.
Who do we blame? Is there anyone to blame? Of course there is.
The chair of the Security & Exchange Commission. Not only was he warned of the derivatives problems, of Madoff’s theft, and of other bubbles, he went out of his way to protect Wall and its grubby huge profits, rather than fix the problem or even investigate the complaints.
Secretary of the Treasury. This rogue lied to America repeatedly, even after he knew that his house of cards was collapsing. Then, at the very end, he scared congress into giving him money which he promptly used to reward his Wall Street buddies.
Federal Reserve Board Chairman. His actions leading up to the collapse were reprehensible. It was also his duty to monitor TARP and "protect" the interest of taxpayers.
In a secret December 10, 2008 Fed meeting, staffers reported that the TARP oversight board had no capacity or ability to monitor how TARP funds were being spent. Despite this report, the board deliberately held back from the public until December 31, 2008.
And the good news keeps on coming. This morning, Freddie Mac demanded another 30 billion. The fraudsters who used to be in charge of Freddie and Fannie deserve fail sentences. Also today, First Centennial Bank of California shut its doors. Let’s see what sort of corporate malfeasance took place to bring that company down.
In case you think I am picking on Democrats, I am not. Barney is simply a conveniently named culprit. There are many more coconspirators on the GOP side. One of them deserves special attention. Congresscritter John Boehner’s (R-OH). Boehner’s most serious concern? The size of his package. Stimulation through contraceptives, indeed. No wonder some call him boner.