In my opinion, President Bush and Treasury Secretary Henry Paulson have lots of explaining to do concerning the bailout passed by Congress. The Bush Administration’s financial rescue package, while originally thought to have a $700 billion cost, now looks like it will cost much more. Even at a higher cost, it won’t be enough to stop the economic woes facing our nation unless strong controls are put in place. Interestingly, half of the money has already been spent – going to banks – and not to rescue folks whose homes were foreclosed. That wasn’t what I thought Congress had authorized. American taxpayers need some real answers from Secretary Paulson. They also need to know how this now-powerful man will spend the $350 billion that remains in the Troubled Assets Relief Program (TARP).
There don’t appear to be any clear and definitive guidelines as to who will actually get the rest of this money or what exact purpose it will serve. As part of the bailout bill passed in October, Congress set up TARP, which gives the Treasury Secretary broad authority “to purchase, and to make and fund commitments to purchase troubled assets from any financial institution.” Congress gave the Treasury $250 billion in the first installment, which is known as the Capital Purchase Program. Apparently, that was made available to banks, savings associations and certain bank and savings and loan holding companies.
I understand that President Bush has now requested an additional $100 billion. At least $40 billion is being used to purchase American International Group stock. In return, AIG is supposed to comply with strict limits on executive compensation, corporate expenses and lobbying. I am told the remaining $350 billion will go out with strings attached. The President can ask for the balance, but thank goodness Congress has the right to say no or at least I hope it has that authority. Frankly, I’m not real sure why the government is bailing out AIG, an insurer, which lost more than $24 billion in the most recent quarter. AIG certainly doesn’t seem to be in a position to lend any money. The American people need to know how TARP will reopen lending by banks and how much more money will be needed to get the job done.
I’m concerned the bailout will wind up being a bad deal for the American people. Hopefully, I am wrong and the bailout will eventually work. At present, however, it appears not to be working, and more corporate executives are getting in line for a hand-out. We can’t afford for the bailout to wind up being little more than corporate welfare.
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