November 14, 2008 No comments









Bailout Money Goes Rogue

Yesterday’s Washington Post had a chilling article about the trillion dollars in bailout money. It is, lacking a better word, rogue — there is no real oversight committee or audit rules in place. The key watchdog roles remain unfilled.

WaPo:

In the six weeks since lawmakers approved the Treasury’s massive bailout of financial firms, the government has poured money into the country’s largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

“It’s a mess,” said Eric M. Thorson, the Treasury Department’s inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. “I don’t think anyone understands right now how we’re going to do proper oversight of this thing.”

Why am I not surprised at all by this?

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Source:
Bailout Lacks Oversight Despite Billions Pledged
Watchdog Panel Is Empty; Report Is Unfinished
Amit R. Paley
Washington Post, November 13, 2008; A01

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/12/AR2008111202846_pf.html

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November 10, 2008 No comments
















WAPO: Treasury Illegally Repeals Tax Law

Front page article in the Washington Post today, calling attention to a highly questionable aspect of the $750 billion bailout plan: A Quiet Windfall For U.S. Banks.

We learn from WaPo that the Treasury Department slipped through a $140 billion tax windfall to US banks — in theory repealing 1986 legislation, passed by Congress and signed by President Reagan.

The likely illegal change was aggressively lobbied for by banking officials, who sought to take advantage of the market turmoil and credit crisis.This is an ongoing issue we have witnessed in every prior bailout: Opportunism knows no sense of decency.

WaPo:

The financial world was fixated on Capitol Hill as Congress battled over the Bush administration’s request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

“Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no,” said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. “They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks.”

This should come as no surprise to long-time watchers of the Bush White House. From their extra-legal signing statements (they took them seriously, but legal scholars said they had no legal standing) to the abuses at the Justice Department, there was very little respect ever paid to the US Constitution.

How typical of the rogue elements within the outgoing administration.

Look for litigation about this shortly . . .

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Source:
A Quiet Windfall For U.S. Banks
With Attention on Bailout Debate, Treasury Made Change to Tax Policy
Amit R. Paley
Washington Post, November 10, 2008; Page A01

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/09/AR2008110902155.html

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