0
   

Main Stream press starting to notice betrayal of tax payers by Bush and Paulson

 
 
Reply Tue 11 Nov, 2008 10:52 am
A Quiet Windfall for US Banks
Monday 10 November 2008
by: Amit R. Paley, The Washington Post

With attention on bailout debate, Treasury made change to tax policy.

The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."

The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.

The change to Section 382 of the tax code - a provision that limited a kind of tax shelter arising in corporate mergers - came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.

Andrew C. DeSouza, a Treasury spokesman, said the administration had the legal authority to issue the notice as part of its power to interpret the tax code and provide legal guidance to companies. He described the Sept. 30 notice, which allows some banks to keep more money by lowering their taxes, as a way to help financial institutions during a time of economic crisis. "This is part of our overall effort to provide relief," he said.

The Treasury itself did not estimate how much the tax change would cost, DeSouza said.

A Tax Law "Shock"

The guidance issued from the IRS caught even some of the closest followers of tax law off guard because it seemed to come out of the blue when Treasury's work seemed focused almost exclusively on the bailout.

"It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops," said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. "I've been in tax law for 20 years, and I've never seen anything like this."

More than a dozen tax lawyers interviewed for this story - including several representing banks that stand to reap billions from the change - said the Treasury had no authority to issue the notice.

Several other tax lawyers, all of whom represent banks, said the change was legal. Like DeSouza, they said the legal authority came from Section 382 itself, which says the secretary can write regulations to "carry out the purposes of this section."

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes.

Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes.

But from the beginning, some conservative economists and Republican administration officials criticized the new law as unwieldy and unnecessary meddling by the government in the business world.

"This has never been a good economic policy," said Kenneth W. Gideon, an assistant Treasury secretary for tax policy under President George H.W. Bush and now a partner at Skadden, Arps, Slate, Meagher & Flom, a law firm that represents banks.

The opposition to Section 382 is part of a broader ideological battle over how the tax code deals with a company's losses. Some conservative economists argue that not only should a firm be able to use losses to offset gains, but that in a year when a company only loses money, it should be entitled to a cash refund from the government.

During the current Bush administration, senior officials considered ways to implement some version of the policy. A Treasury paper in December 2007 - issued under the names of Eric Solomon, the top tax policy official in the department, and his deputy, Robert Carroll - criticized limits on the use of losses and suggested that they be relaxed. A logical extension of that argument would be an overhaul of 382, according to Carroll, who left his position as deputy assistant secretary in the Treasury's office of tax policy earlier this year.

Yet lobbyists trying to modify the obscure section found that they could get no traction in Congress or with the Treasury.

"It's really been the third rail of tax policy to touch 382," said Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute.

"The Wells Fargo Ruling"

As turmoil swept financial markets, banking officials stepped up their efforts to change the law.

Senior executives from the banking industry told top Treasury officials at the beginning of the year that Section 382 was bad for businesses because it was preventing mergers, according to Scott E. Talbott, senior vice president for the Financial Services Roundtable, which lobbies for some of the country's largest financial institutions. He declined to identify the executives and said the discussions were not a concerted lobbying effort. Lobbyists for the biotechnology industry also raised concerns about the provision at an April meeting with Solomon, the assistant secretary for tax policy, according to talking points prepared for the session.

DeSouza, the Treasury spokesman, said department officials in August began internal discussions about the tax change. "We received absolutely no requests from any bank or financial institution to do this," he said.

Although the department's action was prompted by spreading troubles in the financial markets, Carroll said, it was consistent with what the Treasury had deemed in the December report to be good tax policy.

The notice was released on a momentous day in the banking industry. It not only came 24 hours after the House of Representatives initially defeated the bailout bill, but also one day after Wachovia agreed to be acquired by Citigroup in a government-brokered deal.

The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.

The Jones Day law firm said the tax change, which some analysts soon dubbed "the Wells Fargo Ruling," could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article.

The tax world, meanwhile, was rushing to figure out the full impact of the notice and who was responsible for the change.

Jones Day released a widely circulated commentary that concluded that the change could cost taxpayers about $140 billion. Robert L. Willens, a prominent corporate tax expert in New York City, said the price is more likely to be $105 billion to $110 billion.

Over the next month, two more bank mergers took place with the benefit of the new tax guidance. PNC, which took over National City, saved about $5.1 billion from the modification, about the total amount that it spent to acquire the bank, Willens said. Banco Santander, which took over Sovereign Bancorp, netted an extra $2 billion because of the change, he said. A spokesman for PNC said Willens's estimate was too high but declined to provide an alternate one; Santander declined to comment.

Attorneys representing banks celebrated the notice. The week after it was issued, former Treasury officials now in private practice met with Solomon, the department's top tax policy official. They asked him to relax the limitations on banks even further, so that foreign banks could benefit from the tax break, too.

Congress Looks for Answers

No one in the Treasury informed the tax-writing committees of Congress about this move, which could reduce revenue by tens of billions of dollars. Legislators learned about the notice only days later.

DeSouza, the Treasury spokesman, said Congress is not normally consulted about administrative guidance.

Sen. Charles E. Grassley (R-Iowa), ranking member on the Finance Committee, was particularly outraged and had his staff push for an explanation from the Bush administration, according to congressional aides.

In an off-the-record conference call on Oct. 7, nearly a dozen Capitol Hill staffers demanded answers from Solomon for about an hour. Several of the participants left the call even more convinced that the administration had overstepped its authority, according to people familiar with the conversation.

But lawmakers worried about discussing their concerns publicly. The staff of Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, had asked that the entire conference call be kept secret, according to a person with knowledge of the call.

"We're all nervous about saying that this was illegal because of our fears about the marketplace," said one congressional aide, who like others spoke on condition of anonymity because of the sensitivity of the matter. "To the extent we want to try to publicly stop this, we're going to be gumming up some important deals."

Grassley and Sen. Charles E. Schumer (D-N.Y.) have publicly expressed concerns about the notice but have so far avoided saying that it is illegal. "Congress wants to help," Grassley said. "We also have a responsibility to make sure power isn't abused and that the sensibilities of Main Street aren't left in the dust as Treasury works to inject remedies into the financial system."

Carol Guthrie, spokeswoman for the Democrats on the Finance Committee, said it is in frequent contact with the Treasury about the financial rescue efforts, including how it exercises authority over tax policy.

Lawmakers are considering legislation to undo the change. According to tax attorneys, no one would have legal standing to file a lawsuit challenging the Treasury notice, so only Congress or Treasury could reverse it. Such action could undo the notice going forward or make it clear that it was never legal, a move that experts say would be unlikely.

But several aides said they were still torn between their belief that the change is illegal and fear of further destabilizing the economy.

"None of us wants to be blamed for ruining these mergers and creating a new Great Depression," one said.

Some legal experts said these under-the-radar objections mirror the objections to the congressional resolution authorizing the war in Iraq.

"It's just like after September 11. Back then no one wanted to be seen as not patriotic, and now no one wants to be seen as not doing all they can to save the financial system," said Lee A. Sheppard, a tax attorney who is a contributing editor at the trade publication Tax Analysts. "We're left now with congressional Democrats that have spines like overcooked spaghetti. So who is going to stop the Treasury secretary from doing whatever he wants?"
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Type: Discussion • Score: 0 • Views: 862 • Replies: 18
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dyslexia
 
  1  
Reply Tue 11 Nov, 2008 11:09 am
@BumbleBeeBoogie,
and this means ?
BumbleBeeBoogie
 
  1  
Reply Tue 11 Nov, 2008 11:15 am
@dyslexia,
We now know why Citibank and Wells Fargo wanted to buy failing companies. They made a bundle and the tax payers were screwed again.

Do you still trust Paulson?

BBB
hawkeye10
 
  0  
Reply Tue 11 Nov, 2008 11:31 am
@BumbleBeeBoogie,
we are letting a few guys decidehow to spend trillions of dollars of our kids money, and remake the financial system as they see fit, because of fear. We have been told that we don't have time to have a debate, we don't have time to let the democratic institutions handle the situation. If we don't do something fast all will be lost, we have been told. And we believe it.

We said after we realized that 9/11 was used as a pretext for invading Iraq, after we saw how our fear was used to manipulate us, that we would never again allow our leaders play up fear and use it to further their agendas. Yet here we are, doing it all over again. We are handing out cash we don't have in hundreds billion dollar allotments to banks and shadow banks that have been chosen by a handful of men behind closed doors. Are we now going to be shocked that corruption has a large hand in deciding who gets the money??

Yes, because Americans are slow learners.
0 Replies
 
dyslexia
 
  1  
Reply Tue 11 Nov, 2008 11:56 am
@BumbleBeeBoogie,
BumbleBeeBoogie wrote:

We now know why Citibank and Wells Fargo wanted to buy failing companies. They made a bundle and the tax payers were screwed again.

Do you still trust Paulson?

BBB
yes until you can give me a reason not to.
talk72000
 
  1  
Reply Tue 11 Nov, 2008 05:41 pm
@dyslexia,
Quote of the Day: Net Capital Rule

Here is the quote of the day:

...we and other global firms have, for many years, urged the SEC to reform its net capital rule to allow for more efficient use of capital. This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors risk-based capital standards must become the norm. The SEC has made it clear that risk-based capital rules can be implemented only when the Commission is confident that firms employing value-at-risk models have robust credit and risk management policies in place.

Translated into English, this testimony from back in 2000 was from someone asking that major brokerage firms be permitted to increase leverage subject to oversight of their wondrous mathematical risk models. The request was agreed to four years later, in 2004, and it helped lead to the meltdown in independent brokers this year.

The speaker? Some guy named Henry Paulson, the then-CEO of Goldman Sachs. I wonder what happened to him.

[Source]http://paul.kedrosky.com/archives/2008/10/03/quote_of_the_da_6.html
0 Replies
 
talk72000
 
  1  
Reply Tue 11 Nov, 2008 05:49 pm
@dyslexia,
Paulson can't be trusted.

He was for replacing Net Capital Rule for some statistics based Risk Assessment software thus endangering the deposits of ordinary people and investors.

http://banking.senate.gov/00_02hrg/022900/paulson.htm
0 Replies
 
dyslexia
 
  1  
Reply Tue 11 Nov, 2008 07:18 pm
@BumbleBeeBoogie,
i must be dense because I can't make heads or tails out of your cut/paste.
this is the best source of info i can find re this issue.
Quote:
The Internal Revenue Service (the "IRS") on October 14, 2008 issued Notices 2008-100 and 2008-101 (the "Notices") to provide guidance to banks participating in the Federal government's Capital Purchase Program (the "CPP"), included as part of the Emergency Economic Stabilization Act of 2008's Troubled Asset Relief Program (the "TARP"). The Notices provide for exceptions to the application of certain provisions of Sections 382 and 597 of the Internal Revenue Code of 1986 (the "Code") in the case of capital infusions from the Treasury Department pursuant to the CCP. Notice 2008-100 provides guidance to corporations regarding the application of Section 382 of the Code. Notice 2008-101 provides guidance regarding the application of the "Federal financial assistance" provision contained in Section 597 of the Code.

Notice 2008-100 provides that any shares of stock of a bank acquired by the Treasury Department pursuant to the CPP shall not be considered to have caused an ownership change with respect to the Treasury Department's ownership of the stock of such bank. In general, Section 382 of the Code limits a corporation's deduction for net operating loss carryovers and recognized built-in losses subsequent to an ownership change. An ownership change, as defined in section 382(g) of the Code, is, generally, a change of 50% or more of the ownership of a corporation within a three-year period. Prior to Notice 2008-100, the Treasury Department's acquisition of certain stock of a bank under the CPP could have resulted in an ownership change, thereby limiting the bank's ability to utilize prior losses to reduce its taxable income.

Additionally, Notice 2008-100 provides that shares of stock of a bank redeemed from the Treasury Department shall be treated as if they had never been outstanding for purposes of determining if such redemption has effected an ownership change with respect to other shareholders. Furthermore, Notice 2008-100 provides guidance concerning (i) the effect of the CPP on a bank's status as a member or parent of an affiliated group, (ii) the Treasury Department's acquisition of warrants to purchase bank stock, and (iii) the treatment of options acquired by the Treasury Department. Notice 2008-100 further provides that, for purposes of Section 382(l)(1) of the Code, any capital infusion made by the Treasury Department in a bank pursuant to the CPP shall not be considered to have been made as part of a plan a principal purpose of which was to avoid or increase any limitation imposed by Section 382 of the Code.

Notice 2008-101 provides that no amount furnished by the Treasury Department to a bank pursuant to the TARP shall be treated as "financial assistance" within the meaning of Section 597 of the Code. Section 597 of the Code generally treats money and other property received by a bank from the Federal Deposit Insurance Corporation as "Federal financial assistance." Such assistance is generally treated as taxable income to the recipient bank and, prior to Notice 2008-101, could have included the Treasury Department's acquisition of certain stock of the bank under the TARP.

Banks may rely on the guidance contained in the Notices unless and until the IRS issues further guidance. While the IRS intends to issue regulations that set forth the rules described in Notice 2008-100, such regulations will not apply, however, to acquisitions by the Treasury Department prior to the publication of such regulations or pursuant to written binding contracts entered into prior to the publication of such regulations.

http://www.mondaq.com/article.asp?articleid=68244
0 Replies
 
BumbleBeeBoogie
 
  1  
Reply Wed 12 Nov, 2008 10:12 am
Paulson: Troubled Assets Will Not Be Purchased
MARTIN CRUTSINGER
November 12, 2008

WASHINGTON " Treasury Secretary Henry Paulson says that the $700 billion government rescue program will not be used to purchase troubled assets as originally planned.

Paulson says the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.
dyslexia
 
  1  
Reply Wed 12 Nov, 2008 10:32 am
@BumbleBeeBoogie,
your point is?
Quote:
He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.
makes sense to me.
BumbleBeeBoogie
 
  1  
Reply Thu 13 Nov, 2008 10:46 am
@dyslexia,
Bailout Lacks Oversight Despite Billions Pledged
Watchdog Panel Is Empty; Report Is Unfinished
By Amit R. Paley
Washington Post Staff Writer
Thursday, November 13, 2008; A01

In the six weeks since lawmakers approved the Treasury's massive bailout of financial firms, the government has poured money into the country's largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

"It's a mess," said Eric M. Thorson, the Treasury Department's inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

In approving the rescue package, lawmakers trumpeted provisions in the legislation that established layers of independent scrutiny, including a special inspector general to be nominated by the White House and a congressional oversight panel to be named by lawmakers themselves.

Some lawmakers and their aides fear that political squabbling on Capitol Hill and bureaucratic logjams could delay their work for months. Meanwhile, the Congressional Budget Office, which also has some oversight responsibilities, is worried about the difficulty of hiring people who can understand the intensely complicated financial work involved.

The legislation grants the special inspector, who is expected to be the primary overseer of the program, a budget of $50 million. The measure calls for him to conduct audits and investigations of how the government spends money under the bailout program, including on equity investments in firms. In particular, he is to report about any assets acquired and their value, plus an explanation of why they were acquired and details on individuals or companies involved in the transactions.

The leading candidate for the post is Neil M. Barofsky, a federal prosecutor in New York, and his nomination could come as soon as this week, according to people familiar with the matter.

Barofsky, an assistant U.S. attorney in the Southern District of New York, is the chief of the office's mortgage fraud group and the lead prosecutor in the $2.4 billion accounting-fraud case against former executives of the collapsed financial firm Refco. He was formerly a white-collar criminal defense attorney in New York.

It is unclear that Barofsky would be confirmed by the Senate, as required, anytime soon. One complicating factor is a battle between the Finance and Banking committees over which has jurisdiction over the confirmation process. Spokeswomen for both panels said the issue has not been resolved and may not be until after President Bush names his choice.

Nonetheless, the finance committee has scheduled a hearing for Monday afternoon in the event that a nominee is named.

Several congressional aides, however, said they did not understand how the Senate could possibly do all the proper vetting for such a critical appointment in just a few days. Thorson's confirmation process, for example, took nearly a year. But Treasury officials and Senate aides worry that if the nominee is not confirmed next week, when Congress is back in town for a lame-duck session, then the process might be delayed well into next year.

Some Republican lawmakers have said they are also concerned that Democrats may avoid acting on the nomination so that Barack Obama can choose his own special inspector general after he becomes president. But people familiar with the matter said Barofsky, the leading candidate for the position, would be palatable to the incoming administration because he supported Obama.

In the meantime, Thorson is trying to oversee the program in addition to his other responsibilities. Treasury Secretary Henry M. Paulson Jr. asked him to take on those duties. Thorson has a few dozen people working on the program, but none are doing so full time. He said there should be at least 100 people in the new special inspector general's office.

Lawmakers from both parties have criticized the White House for not moving more quickly to name an appointee.

"Considering how taxpayers' money around Washington isn't respected, a day shouldn't go by without having an inspector general checking on it," said Sen. Charles E. Grassley (R-Iowa), the ranking member on the Finance Committee.

Tony Fratto, deputy White House press secretary, declined to comment on the nominee or when he or she would be named but said there is adequate scrutiny of the bailout.

"No program in the history of the federal government has had more layers of oversight and reporting and transparency," he said.

For their part, lawmakers have yet to nominate the five-member Congressional Oversight Panel, though leaders of both parties said they hoped they would be named by the end of the month and start work by December. People familiar with the matter said possible nominees included current and former government and industry officials, though some had to recuse themselves because of conflicts of interest.

The panel's mandate is to look at the use of Paulson's authority and the impact of the program on the financial markets and mortgage crisis.

Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, said his concerns about oversight diminished after the Treasury program's focus shifted from purchases of financial firms' troubled assets to capital injections into companies. "The concern was they'd be buying assets and we wouldn't know the price," Frank said. The revised bailout program "doesn't have the conflicts of interest and the other things people were concerned about."

The delays in selecting both the special inspector general and the congressional oversight panel have prevented the release of a detailed oversight report required in the legislation. Under the law, the congressional panel was required to release a report 30 days after the bailout program began, a deadline that has passed. It is supposed to issue a more elaborate report on the financial regulatory process by Jan. 20, a deadline congressional aides said will be nearly impossible to make.

The special inspector general is supposed to release a report within 60 days of his confirmation. Though Thorson, the Treasury inspector general, is not required to prepare a report, he said he might feel obligated to issue one if the Senate does not confirm a special inspector by Monday.

The Government Accountability Office, the investigative arm of Congress, is also required by the legislation to conduct oversight of the program. The agency's mission is to look at the overall performance of the initiative and its effect on the financial system.

The GAO has dedicated about 20 people to look at the bailout and has office space at the Treasury Department. Agency officials said they expect to issue a brief report on the program, as mandated by the legislation, within the next month.

The legislation also created a body called the Financial Stability Oversight Board, whose five members include Paulson and Federal Reserve Chairman Ben S. Bernanke. But it has no staff of its own, and few expect that policymakers can conduct oversight of themselves. "It's sort of a joke in terms of oversight," a congressional aide said.
--------------------------------------

Staff writers Lori Montgomery and Dana Hedgpeth contributed to this report.
dyslexia
 
  1  
Reply Thu 13 Nov, 2008 10:56 am
@BumbleBeeBoogie,
and your thoughts/analysis about this is what?
BumbleBeeBoogie
 
  1  
Reply Thu 13 Nov, 2008 11:02 am
@dyslexia,
I think everything is screwed up.

BBB
dyslexia
 
  1  
Reply Thu 13 Nov, 2008 11:36 am
@BumbleBeeBoogie,
BBB from your cut/paste above;
(1) Bush has NOT nominated a Special Prosecutor
(2) Congress has NOT created an oversight committee
How does this relate to Henry Paulson?

dyslexia
 
  1  
Reply Thu 13 Nov, 2008 05:12 pm
@dyslexia,
dyslexia wrote:

BBB from your cut/paste above;
(1) Bush has NOT nominated a Special Prosecutor
(2) Congress has NOT created an oversight committee
How does this relate to Henry Paulson?


No response?
BumbleBeeBoogie
 
  1  
Reply Fri 14 Nov, 2008 08:48 am
@dyslexia,
My post was not about Paulson, but was about the same general economy fix subject.

You just want to nit pick.

BBB
dyslexia
 
  1  
Reply Fri 14 Nov, 2008 11:17 am
@BumbleBeeBoogie,
BumbleBeeBoogie wrote:

My post was not about Paulson, but was about the same general economy fix subject.

You just want to nit pick.

BBB
Quote:
betrayal of tax payers by Bush and Paulson
0 Replies
 
BumbleBeeBoogie
 
  1  
Reply Tue 18 Nov, 2008 10:28 am
Stripping Paulson of His Remaining Power and Money
Monday 17 November 2008
by: David Sirota, The Campaign for America's Future

Treasury Secretary Henry Paulson is spending the $700 billion with no oversight. (BBB: Congress is partially responsible for the lack of oversight by it's failure to appoint the oversite structure.)

Remember when Doris Kearns Goodwin and the rest of the elite media socialites took to the studios of Charlie Rose's show to portray the opponents of the bailout as wild-eyed leftists? Seems there's some serious bipartisan pushback going on.

Washington - US Sen. Jim Inhofe said Saturday that Congress was not told the truth about the bailout of the nation's financial system and should take back what is left of the $700 billion "blank check" it gave the Bush administration.

"It is just outrageous that the American people don't know that Congress doesn't know how much money he (Treasury Secretary Henry Paulson) has given away to anyone," the Oklahoma Republican told the Tulsa World.

"It could be to his friends. It could be to anybody else. We don't know. There is no way of knowing."

Inhofe, who on issues like global warming is something of a know-nothing, is nonetheless absolutely correct on this one. Bailoutsleuth.com has been reporting how Paulson has tried to shroud bailout expenditures in secrecy, while Bloomberg News recently reported that Federal Reserve Chairman Ben Bernanke is refusing to release the names of the recipients of about $2 trillion in taxpayer-funded loans.

Inhofe will likely find an ally in Sen. Bernie Sanders (I-VT), who issued this press release this morning:

WASHINGTON, November 17 - Senator Bernie Sanders (I-Vt.) said today he will introduce legislation to stop the release of a $350-billion second round of the Wall Street bailout.

Sanders, who voted against the $700-billion package Congress approved in October, said he has serious concerns about how the Bush administration and Treasury Secretary Henry Paulson are spending the bailout money that was already released. He also said it was unacceptable that the oversight provisions in the bill were ignored.

When the bailout originally passed over bipartisan objections, many voices began demanding Paulson refrain from buying bad mortgages, and instead buy voting stock in banks on terms that force banks to make loans off the new capital, restrict bank salaries/dividends and protect taxpayers' investment. Paulson partially buckled to that pressure, first a few weeks ago, then again late last week. Indeed, he discarded his original proposal (which would have been a straight-up giveaway) and began buying stakes in banks. The problem is he opted to buy non-voting stock on bad terms that do not protect taxpayers and allow bank executives to continue paying bonuses.

Now, with bipartisan congressional anger mounting, we may see a forceful legislative campaign to take back what remaining money Paulson wants to give away to his friends on Wall Street. The guy is working overtime to shovel out as much taxpayer money - our money - to his buddies before January 20th comes and he's out of a job. It's time to stop the kleptocracy, take back the money and spend it on a major economic stimulus to bolster the real economy here in "real America" where real people work real jobs - not simply give it away to a few financial industry fat cats in Manhattan.

UPDATE: Check this out from the Financial Times:

A senior Republican senator is seeking an investigation into potential conflicts of interest among former Goldman Sachs executives serving at the US Treasury and whether any officials exceeded their authority by implementing a controversial tax change without the approval of Congress.

Chuck Grassley, the most senior Republican on the Senate finance committee, asked Eric Thorson, inspector-general of the Treasury, to investigate the "independence" of several Treasury officials who formerly worked at Goldman Sachs and serve as advisers to Treasury secretary Hank Paulson, the former chief executive of the Wall Street bank.

BumbleBeeBoogie
 
  1  
Reply Tue 18 Nov, 2008 10:30 am
@BumbleBeeBoogie,
http://bailoutsleuth.com/
0 Replies
 
 

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