No One's Watching the Treasury

In African and South American countries, one of the hallmarks of a regime change is the looting of the public treasury. Every safe, strongbox, cash drawer, and cookie jar is stripped clean by the cronies the outgoing administration.

A similar story was in the NYTimes today. In case you think it can't happen here:

At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

“Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

And don't get the idea this is one arrogant SOB who's bucking the trend. The Times article has a video with four more of the scum-sucking reptiles, errr... I mean bank presidents, all announcing they're planning to use it to acquire other banks, and to grow their business. Not to help the beleaguered American homeowner, or business person. Nope, the money's going to be used to increase their shareholder's value! And wait... you be the judge. I don't think they're even grateful. They think it's theirs.

In a bold and stunning end-of-term gambit by GWB and friends (Paulsen, Bernanke), the American public was told they had to pony up three-quarters of a trillion dollars to bail out the banks, or the consequences would be dire. The house of representatives, concerned by such an expensive and frankly unexamined move, rejected it at first, so for the next week or so, as the stock market plumetted and the value of people's homes and 401K's dropped by as much as a third or more, the administration was everywhere at once chanting pious nostrums about rebuilding confidence in the system and hinting relief for the millions of Americans over their heads in mortgage debt.

The basic problem was banks wouldn't lend to one another, because of the shenannigans that took place when Lehman Brothers collapsed. No one is going to lend money to a person playing Russian Roulette, because on the next turn you might be out of your funds for good. It's fine to say, as Paulsen, Bernanke, and others in the administration did, that the loans were going to address the mortgage crisis, but they knew then, and they know now (even after Congress passed the bill to release round two of the bailout money) that the money was just to prop up the banks confidence in one another, and keep the status quo. Congress didn't understand that, though. They released the money anyway.

As for the American people: Got a mortgage you can't afford, that's for more than your house is worth? Sucks to be you. Got an adjustable rate mortgage that's about to balloon to 10% interest? Probably should have read the fine print. Has your retirement fund shrunk to uselessness? Get back to work. Oh, your job no longer exists? Bummer. Vote for the Republicans again, who know how to save a buck and shrink the government rolls and take care of real Americans.

The two trillion plus dollars the Bush Administration injected into the US banking system from common American taxpayers isn't going to help a single distressed American homeowner. It's going to be used by the banks to buy more banks, and to keep in the safe to prove the bank's fit to stay in the big old poker game. GWB may not be bright enough to know he's been had. Paulsen and Bernanke are. They've stripped the treasury, and no one is calling them on it. Not even our elected representatives, who are supposed to be watching the door of the Treasury. It's sickening.