Lobbyist Feeding Frenzy for Remaining TARP Funds & No Accountability

Thursday, November 13, 2008

Do you get the impression that nobody in the government knows what to do, that they are just trying one thing after another to see what fix might work to stem this economic collapse? This improvisational drama is really scary. And billions of taxpayer dollars are being dropped out of helicopters still with no oversight, transparency or accountability. And now there is a feeding frenzy as lobbyists jockey for the remaining 60 billion of unspent TARP funds. Here is an excerpt from LOU DOBBS TONIGHT, November 12, 2008 (bold added for emphasis):

DOBBS: An astonishing reversal by Treasury Hank Paulson today on that huge trillion dollar bailout of Wall Street. This after Secretary Paulson's outright fear mongering back in September when he said the purchase of toxic assets, the only way to save our banking system from collapse. Lisa Sylvester has our report.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Treasury Secretary Henry Paulson making a dramatic u-turn from the plan he sold Congress and the American people back in September.

PAULSON: We said the right way to do this is not going around and using guarantees or injecting capital.

SYLVESTER: But today, that's exactly what the Treasury secretary is doing. The Treasury Department has already pumped nearly $300 billion into U.S. banks. Paulson now wants the Treasury Department to expand the program, injecting capital into the markets for credit cards, auto and student loans. Paulson also announced he's scrapping the cornerstone of his original plan to buy up toxic bank assets. PAULSON: When we went to Congress, illiquid assets looked like the way to go. As the situation worsened, the facts changed.

SYLVESTER: Paulson didn't say what facts changed, and he doesn't seem to be looking back.

PAULSON: I will never apologize for changing an approach or a strategy when the facts change.

SYLVESTER: Critics say Paulson doesn't appear to have a solid plan in place.

PETE SEPP, NATIONAL TAXPAYERS UNION: No one is really driving this policy bus. People are just all sitting in the back yelling to go this direction or that and they're hoping that they won't run into something and crash the entire thing.

SYLVESTER: Much of the first installment has already been spent, but instead of loaning the money to unclog the credit system, many banks are holding on to it.

STEPHEN MOORE, WALL STREET JOURNAL: We still have a crisis in the banking industry, and there's no evidence that that 300 billion that has already been spent has had an efficient effect in terms of getting the financial markets working again.

SYLVESTER: There's not a lot of transparency or accountability either. The bailout package passed by Congress called for a special inspector general to oversee how the money is being spent. That position is still vacant.


SYLVESTER: Congress also called for a joint House/Senate oversight committee, but because lawmakers are out of session, that's not up and running, so at this point Secretary Paulson has a lot of room to maneuver, make changes, spend billions, without much oversight. And we should mention for financial institutions that want a piece of the bailout, the application it's only two pages long, incredibly -- Lou.

DOBBS: Two pages. Do they have to sign it or anything --

SYLVESTER: They do have to sign it, but you know as many people have pointed out, the credit card applications are longer than this. Now they say that this is a preliminary application, but we are talking billions of dollars here. And again, two pages long. That's the preliminary application.

DOBBS: Do the taxpayers get some sort of reward points if they provide a bailout for something like American Express or one of the credit card companies?

SYLVESTER: You know it is not even clear if taxpayers will ever see a dime of this money. I mean and that's what several of these taxpayer groups like the National Taxpayers Union, they see that this is just throwing money -- that it doesn't even -- there's no sign that it's actually going to work and no sign that taxpayers will ever get this money back, Lou.

And lobbyists and special interests in a feeding frenzy in the nation's capital, trying to win a share of the government's massive bailout, is anyone looking after the interests of the American people? Is there such a thing as our national interest that anyone recognizes at least in Washington, D.C.?

DOBBS: More and more businesses are joining financial institutions seeking a big government bailout. Lobbyists and special interests all looking toward Washington to give their clients a piece of the federal money, but no one seems to be looking out for the interests of American taxpayers as Ines Ferre reports.


INES FERRE, CNN CORRESPONDENT (voice-over): The list of ailing companies running to Uncle Sam for a handout keeps growing. American Express, which turned itself into a bank, is now reportedly asking for $3.5 billion. Expect more to come.

STEVE ELLIS, TAXPAYERS FOR COMMON SENSE: We don't print enough money to bail out every section of corporate America and at the end of the day, some companies are going to go under, some are going to fail, and some we're going to support, but clearly, the taxpayers are going to be at risk for the foreseeable future.

FERRE: Of the $700 billion approved by Congress, Treasury has spent most of the initial $350 billion on banks and AIG. There's now a scramble for the 60 billion left. Lobbyists in Washington are swarming around the money pot. Congresswoman Marcy Kaptur voted against the bailout bill twice.

REP. MARCY KAPTUR (D), OHIO: Those lobbyists have a lot of money behind them and that the ordinary citizen on whose back this bailout price tag has been placed have nobody lobbying for them, but their members of Congress, and we need to get that workout money out now, down into the communities that are being affected.

FERRE: Critics say the bailouts can't continue.

PETER SCHIFF, AUTHOR, "CRASH PROOF": They're in a bus and they're driving for a cliff. And either we're going to drive off the edge of the cliff or we're going to turn course. If we continue on this current policy path, we are going over that cliff.

FERRE: With the American taxpayer along for the ride.


FERRE: And some say that t
he frenzy to get a slice of the bailout money is undermining the original target of the rescue package, to get banks lending again and eventually trickle the money all the way down to Main Street -- Lou.

DOBBS: And I go back to what I said over a year ago and that is we should be trying trickle-up economics here, dealing with the issue of the housing crisis, dealing with the issue of millions of families facing foreclosure here and let that money flow up to the institutions that would receive it and improve their balance sheets.

But this bailout is going to everyone, and now, as we've reported, Barney Frank is getting ready to provide money to the automobile industry. We did a quick check. The market cap of both General Motors and Ford now less than $6 billion. It's incredible.

FERRE: And the thing is the definition of who's getting this money keeps expanding and expanding. So the question that people have is well when does it stop? And when do you say, let's pause for a second and assess ourselves?

DOBBS: And it also raises the question of why in the world is Hank Paulson Treasury Secretary, displaying the incompetence that he has over the course of this crisis and frankly before.

Well GE also participating. Of course we wouldn't want anybody to be left out of the bailout. Their financial unit will be receiving some of that federal bailout money. GE Capital saying it's eligible for government backing of $139 billion of its debt. GE Capital's business that includes credit cards and real estate lending has been hard hit by the credit crisis. Nearly half of GE's earnings in fact originate with its finance business.

House Republican leader John Boehner today demanded that the Federal Reserve tell the American people just who is receiving $2 trillion of emergency loans from the Federal Reserve. Boehner said in a statement that the Fed should comply with the Freedom of Information Act request filed by Bloomberg News.

The congressman said quote, "They must begin providing lawmakers and taxpayers all information about how they are using federal tax dollars."


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