Bush mishandled meltdown

I guess it should come as no surprise to anyone who was paying attention the last eight years but apparently the Bush administration severly mishandledlast fall’s meltdown of the financial industry.

According to Associated Press the governement overpaid tens of billions of dollars for stocks and other assets in its massive bailout last year of Wall Street banks and financial institutions.

AP said the Congressional Oversight Panel, a government watchdog, reported Friday last year’s overpayments amounted to a taxpayer-financed $78 billion subsidy of the firms.

AP also reported that the findings added to the frustrations of lawmakers already wary of the $700 billion rescue plan, known as the Troubled Asset Relief Program. Congress approved the plan last fall, but members of both parties criticized spending decisions by the Bush administration and former Treasury Secretary Henry Paulson.

Senate Banking Chairman Chris Dodd, D-Conn., said the overpayment was sure to “raise eyebrows.

” “I can understand some gap,” he said. “No one is expecting perfection between the price you pay and what you think you’re getting. But that’s a pretty large disparity.”

No kidding. It renews suspicion that the swiftness of the action last fall  was designed to help financial institutions more than taxpayers. After all consider that financially ailing insurance giant American International Group, which the Treasury Department deemed to be too big to be allowed to fail, received $40 billion from the Treasury for assets valued at $14.8 billion, the oversight panel found.

In December, in response to questions from the oversight panel, Paulson wrote that the value of preferred stock purchased by the government was “at or near par,” meaning Treasury paid $1 for every $1 dollar of asset.

 “The way the Treasury secretary described it does not fit with the numbers that were produced in our much more extensive valuation analysis,” panel chairwoman Elizabeth Warren told reporters Friday. “The secretary of the Treasury described it in December that these were par transaction and that is not supported by the numbers.”

 So, once again the business as usual practices followed by the Bush administration are taking a hit. Everyone should agree that more oversight was needed then and more will needed in the future.

New Treasury Secretary Timothy Geithner is expected to announce Monday a sweeping new framework for helping banks, loosening credit and helping reduce foreclosures.

Treasury spokesman Isaac Baker said in a statement: “Treasury’s efforts since the fall prevented a systemwide collapse, but more needs to be done to stabilize the financial sector, increase lending and protect taxpayer dollars.”

He said the plan Geithner will announce aims to free up credit, “while strengthening transparency and accountability measures so that taxpayers know where and how their money is being spent and whether it’s achieving real results.”

Let’s hope the new system works for both financial institutions and taxpayers. It’s another example, though, of the massive ineptitude of George W. Bush.

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2 Responses to Bush mishandled meltdown

  1. John Levy says:

    Wait a minute -in your haste to bash Bush you overlooked a couple of things. Didn’t a Democrat controlled congress pass the bailout? Did Bush have the power to shove it through congress? You said it’s another example of the massive ineptitude of George W. Bush. Well, let’s be fair and add the Democrat controlled congress to that bash.
    So Obama and his cabinet pick Timothy Geithner are going to save us?
    Geithner had not paid $35,000 in self-employment taxes for several years, even though he had acknowledged his obligation to do so, and had filed a request for, and received, a payment for half the taxes owed. The failure to pay self-employment taxes was noted during a 2006 audit by the Internal Revenue Service, in which Geithner was assessed additional taxes of $14,847 for the 2003 and 2004 tax years. Geithner failed to pay, or to admit his failure to pay, the self-employment taxes for the 2001 and 2002 tax years until after President-elect Obama expressed his intent to nominate Geithner to be Secretary of Treasury. He also deducted the cost of his children’s sleep-away camp as a dependent care expense, when only expenses for day care are eligible for the deduction.

    Geithner spent his time at the New York Fed as a backer of the disastrous financial deregulation policy that, at first, wildly profited big banks and speculators, before inevitably leading to the collapse that is now crushing our nation’s economy. Since the crash, he’s been a chief architect of the failed bailout scam that has shoved trillions of our tax dollars into the hands of the very banking hotshots who made this mess.

    And now, as treasury secretary, Geithner is pushing Obama to pursue a second bailout scheme that would take all of the bad investments that Wall Street made and “give” them to the government to manage. His scheme would clean up the ledgers of the banks, making them solvent at our expense, while leaving the same old bankers and their major investors in charge, suffering no penalty for the enormous damage they wreaked on us. What really happens is that, we, the taxpayers, incur that debt.

    The way I see this is more of the same old. So much for Obama’s change!

  2. CJ says:

    Will Geithner put a freeze on taking out payroll taxes for the working class until he, Daschle and the other tax cheat that Obama nominated pay all of thier back taxes and penalties.

    Of course, we should automatically start with the 6 years that they failed to pay, then add on to that until they pay their bill in full, which will probably add up to 10 or 15 years of a federal income tax free paychecks.

    I am in the 18% tax bracket, so that is a significant sum that I can put back in to the local economy doing the things that I can’t afford.

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