Wednesday, October 15, 2008


It is not clear any longer that the Treasury bothers to consider the interest of citizens or concerns itself with process or law. From Naked Capitalism:
To make the point more clearly: the public at large was taken not just once, but twice, It was hosed in the unduly generous terms given to nine banks (the lack of writedown of assets to realistic values, the failure to wipe out current equity holders and subject debt holders to a haircut, the merely symbolic limits on executive pay). But it also got a less obvious shellacking in the way legal and regulatory processes were trampled. Given the Treasury and Fed's combined banking authority, and the dubious valuations of many types of assets on these firms' books, the powers that be could easily have compelled any bank to accept a much less favorable deal, or frankly any deal they wanted them to take. And it would not have taken all that much additional effort (although it might have taken some planning, which is a persistent shortcoming of this Administration).

But Paulson instead went through a bizarre, public exercise in sham corecion (and real sidestepping of even minimal normal forms) so as to avoid a candid discussion of how lousy the banks' balance sheets really were. And the ruse, like the TARP itself, was another demonstration that the Treasury considers itself to be outside the law.
If we're going to strong-arm the banks into taking national money, why not strong-arm them to take the money on terms amenable to the national interest? Has the world completely turned upside down? The government now forces money upon corporations, whether they like it or not, on terms that best suit the corporations. The news reads like a Kafka novel. In the most non-hyperbolic ways possible, I despair for the future of the American Democratic Republic.


  1. >>>"It is not clear any longer that the Treasury bothers to consider the interest of citizens or concerns itself with process or law."<<<

    Do you really believe what this sentence literally says? If (and I assume) not, then why write it? I am sure you mean something else for which there are more accurate words.

  2. Have you read the link? The way the pictures are being painted, such as the Paulson request for no oversight in the original bailout, the begrudging nature Treasury 'accepted' Congressional oversight, the strong-arm tactics with the banks while requiring little in return for the Treasury, the application of $250B without any real constriction on usage, it is certainly far from clear that the Treasury as a whole is acting in the interest or on behalf of the nation's citizens. What is your evidence to the contrary other than your wish that the Treasury is actually acting in good faith?


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