THE TOP 10 – WORSE BAILOUT BOONDOOGLES TODATE

The 10 worst bailout boondoggles

Wall Street titans that have taken taxpayer cash are squandering money on spa retreats, golden parachutes and more. Weren’t the huge bailouts supposed to be spent on saving the economy?

By Michael BrushSo far, the Treasury Department has injected more than $250 billion into the U.S. financial sector.

But precious little has come back out in the form of loans that were supposed to help get the economy going again.

In the meantime, banks have been anything but shy about using billions of dollars for other purposes, many of which seem to have little to do with getting the U.S. economy rolling. Top bailout recipients have spent billions on everything from purchases of foreign companies to extravagant spa retreats and from exorbitant golden parachutes and executive pay packages to CEO use of corporate jets for private trips.

So we did a little monitoring ourselves, with the help of BailoutSleuth.com and other Web sites. Here’s what we found.

Pay to play

Citi Field © Jim McIsaac/Getty Images
Millionaire players on the New York Mets and the Manchester United soccer team should be slapping high-fives over the government bailouts. The reason: The money is helping to pay their salaries. Without $45 billion in government help and a $306 billion backstop on its portfolio of rotten mortgage-backed securities, Citigroup would likely have disappeared. If so, the bank would have reneged on a $400 million, 20-year deal to name the new Mets stadium “Citi Field.” Now, one New York pol quipped, “Citi-Taxpayer Field” might be a better name. And thanks to $144 billion in bailout money, AIG can make good on the $47 million it had agreed to pay for the right to plaster its logo on Manchester United soccer jerseys for the next 18 months. Glory, glory, Man United. AIG says it won’t renew the contract and has eliminated other sports sponsorships.

Empire building

Top bailout recipients Many banks are playing “Let’s Make a Deal” and building empires with bailout money, instead of using it to make loans that help the economy. Shortly after PNC Financial Services got a $7.7 billion cash injection, it announced a buyout of National City. BB&T and Zions Bancorporation have said they have the urge to merge — now that they’ve collectively pocketed $4.5 billion in bailout funds. Bigger banks mean less competition and higher fees for the taxpayers who helped fund these deals. And the mergers have created more banks that are “too big to fail” — so when they come back for more money, it’ll be even harder to say no. BB&T says it would buy only “problem” banks, in the spirit of the bailout program.

Golden parachutes for failure

National City Bank © Aaron Josefczyk/Reuters/Landov Cleveland’s National City bank was run so badly that it was virtually ruined, mainly by imprudent exposure to subprime mortgages. Management’s reward for creating this colossal disaster: $200 million in golden parachutes. And taxpayers will get fleeced a second time. Because of a last-minute change in tax rules, PNC Financial Services, which bought National City, will get about $725 million in income-tax credits. Those credits stem from the $19.9 billion PNC expects to lose on bad loans made by National City.

A bailout for China?

Kenneth Lewis © Roger L. Wollenberg/UPI/Landov, Michael Lewis/CorbisU.S. taxpayers were told the $700 billion financial-system bailout would create jobs by helping the economy. Instead, one of the banks getting the most bailout money is plowing tens of billions of dollars into foreign companies. Bank of America, which will get $25 billion in bailout loans, recently spent about $7 billion to double its stake in state-owned China Construction Bank. B of A, whose CEO is Kenneth Lewis (pictured above), says it would’ve spent the money even without a cash infusion from the feds.
[The Bank Of China owns a significant amount of stock in Bank of America]

AIG’s $440,000 post-bailout party

St. Regis  Resort © age fotostock/SuperStockWhile taxpayers were still absorbing the shock of having to foot an $85 billion bill (a tab that later grew to $144 billion) to bail out American International Group, executives at the insurer headed straight for the exclusive St. Regis resort in Southern California just days after their company got the money. The $440,000 tab for their eight-day stay at the Tuscan-style resort included $150,000 for meals, $23,000 in spa charges and $7,000 for golf outings. AIG says the event was held mainly to reward performance of independent insurance agents and brokers who were not company employees.

How gold is my parachute?

Peter Kraus © Jin Lee/Bloomberg News/Landov   Peter Kraus joined Merrill Lynch in early September to head up its strategy team. But Bank of America, bolstered by $25 billion in bailout money, won shareholder approval this month to take over Merrill. The deal will trigger a golden-parachute clause in Kraus’ contract, allowing him to pocket as much as $25 million for his two months on the job, according to The Wall Street Journal.

Pay to fail

AIG © Everett Kennedey Brown/epa/CorbisShould taxpayers pay to keep executives who steered a company into a ditch? American International Group thinks so. It recently agreed to pay retention bonuses to 130 executives, including $3 million for Jay Wintrob, who heads the division that sells annuities. Last year, he earned $2.5 million in salary, bonus, stock and options. Other AIG execs will get more than $500,000, or about 200% of their salaries, to stay through 2009, according to Bloomberg. The insurer had previously promised to forgo bonus payouts as part of the bailout plan. AIG says retention bonuses are needed to keep execs from leaving while it restructures and that departures could cause the company’s reinsurers to cancel contracts.

Extravagant pay

Richard Fairbank © Michael Temchine/The New York Times/WpNAs millions of Americans learn what it’s like to make ends meet on unemployment insurance, executives at banks getting taxpayer bailouts will continue to live the high life. Capital One Financial CEO Richard Fairbanks (pictured above) got $73.1 million in pay last year, according to The Corporate Library. That’s 1,456 times the median household income of $50,233 earned by taxpayers footing the bill for Capital One’s $3.55 billion federal bailout. Bank of America chief Kenneth Lewis last year took home $23 million, or 458 times the income earned by taxpayers covering his bank’s $25 billion bailout. Both CEOs also make way more than the median of $8.85 million for CEOs at S&P 500 companies. Despite having to lean on taxpayers with modest incomes for help, both CEOs will likely continue to earn stratospheric pay. Neither bank has indicated it plans to cut CEO pay.

Free use of a corporate jet for personal travel

James Dimon and John Mack © Jeff Kowalsky/Bloomberg News/LandovWhile hard times are forcing many Americans to stretch another year out of the family jalopy, the CEOs at banks getting bailout money will continue to ride — and fly — high. John Mack (pictured right), who heads Morgan Stanley, which has taken $10 billion in bailout money so far, enjoyed $356,000 worth of personal use of a corporate jet last year. JPMorgan Chase has gotten $25 billion in bailout money. Its chief, James Dimon (pictured left), took $211 million worth of use of a company jet last year. He used company cars at an estimated cost of $68,000. So far, neither company has indicated it will cut back on CEOs’ personal use of corporate jets as part of its acceptance of taxpayer bailout money.

Lobbying

congress © Mike Theiler/LandovCitigroup, Bank of America and JPMorgan Chase each spent around $5 million lobbying the federal government during the first nine months of 2008. Citigroup is getting $45 billion in bailout money, while the two others are getting $25 billion each. You can expect millions of dollars of that money to be spent on wining and dining Washington lawmakers; none of the banks has indicated it plans to cut back on lobbying.
CONTACT YOUR CONGRESSPERSON AND LET THEM KNOW WHAT YOU THINK? END THE BAILOUTS NOW!
CONGRESS PROMISED THE AMERICAN PEOPLE THAT THIS WOULD NOT HAPPEN –
TELL CONGRESS TO KEEP THAT PROMISE

 

 

$1.6 Billion In Taxpayor TARP Money Paid For Executive Bonuses & Lavish Perks

$1.6 billion went to bailed-out bank execs

Records show bonuses, chauffeurs, health club benefits

updated 2:03 p.m. ET, Sun., Dec. 21, 2008

Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.

The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.

Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.

 

The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines.

 

The AP compiled total compensation based on annual reports that the banks file with the Securities and Exchange Commission. The 116 banks have so far received $188 billion in taxpayer help. Among the findings:

  • The average paid to each of the banks’ top executives was $2.6 million in salary, bonuses and benefits.
  • Lloyd Blankfein, president and chief executive officer of Goldman Sachs, took home nearly $54 million in compensation last year. The company’s top five executives received a total of $242 million.
  • Even where banks cut back on pay, some executives were left with seven- or eight-figure compensation that most people can only dream about. Richard D. Fairbank, the chairman of Capital One Financial Corp., took a $1 million hit in compensation after his company had a disappointing year, but still got $17 million in stock options. The McLean, Va.-based company received $3.56 billion in bailout money on Nov. 14.
  • John A. Thain, chief executive officer of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year. Thain, a former chief operating officer for Goldman Sachs, took the reins of the company in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he earned $57,692 in salary, a $15 million signing bonus and an additional $68 million in stock options. Like Goldman, Merrill got $10 billion from taxpayers on Oct. 28.

Banks that got bailout funds also paid out millions for home security systems, private chauffeured cars, and club dues. Some banks even paid for financial advisers. Wells Fargo of San Francisco, which took $25 billion in taxpayer bailout money, gave its top executives up to $20,000 each to pay personal financial planners.

At Bank of New York Mellon Corp., chief executive Robert P. Kelly’s stipend for financial planning services came to $66,748, on top of his $975,000 salary and $7.5 million bonus. His car and driver cost $178,879. Kelly also received $846,000 in relocation expenses, including help selling his home in Pittsburgh and purchasing one in Manhattan, the company said.

Goldman Sachs’ tab for leased cars and drivers ran as high as $233,000 per executive. The firm told its shareholders this year that financial counseling and chauffeurs are important in giving executives more time to focus on their jobs.

JPMorgan Chase chairman James Dimon ran up a $211,182 private jet travel tab last year when his family lived in Chicago and he was commuting to New York. The company got $25 billion in bailout funds.

http://www.msnbc.msn.com/id/28337800/page/2/

Let Your Congressperson Know What You Think!  Tell Congress To End The Bailouts Now!

http://www.usa.gov/Contact/Elected.shtml

 

What Bailout Transparency? Banks Refuse To Disclose Where Money Is Going

IS THE AUTO BAILOUT NEXT?

Where’d the bailout money go? Shhhh, it’s a secret

By MATT APUZZO, Associated Press Writer

 

WASHINGTON – It’s something any bank would demand to know before handing out a loan: Where’s the money going? But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,'” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?

None of the banks provided specific answers.

Some banks said they simply didn’t know where the money was going.

“We manage our capital in its aggregate,” said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.

The answers highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion — about the size of the Netherlands’ economy — to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money.

There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money — not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that’s happening and there are no consequences for banks who don’t comply.

“It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry,” said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout.

But, at least for now, there’s no way for taxpayers to find that out.

Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.

“Those are legitimate questions that should have been asked on Day One,” said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. “Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?”

Nearly every bank AP questioned — including Citibank and Bank of America, two of the largest recipients of bailout money — responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.

No bank provided even the most basic accounting for the federal money.

“We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.

Others said the money couldn’t be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money “doesn’t have its own bucket.” But he said taxpayer money wasn’t used in the bank’s recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn’t being tracked, Denham said the bank would have made that deal regardless.

Others, such as Morgan Stanley spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: “We are going to decline to comment on your story.”

Most banks wouldn’t say why they were keeping the details secret.

“We’re not sharing any other details. We’re just not at this time,” said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.

Heine, the New York Mellon Corp. spokesman who said he wouldn’t share spending specifics, added: “I just would prefer if you wouldn’t say that we’re not going to discuss those details.”

Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending.

“What we’ve been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we’re doing this,” Paulson said at a recent forum in New York. “So we’re building this organization as we’re going.”

Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they’ve spent the money.

“It would take a lot of nerve not to give answers,” she said.

But Warren said she’s surprised she even has to ask.

“If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn’t be in a position where you’re trying to call every recipient and get the basic information that should already be in public documents,” she said.

Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went.

“A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal,” he said.

___

Associated Press writers Stevenson Jacobs in New York and Christopher S. Rugaber and Daniel Wagner in

WHEN CONGRESS PASSED “TARP” THEY PROMISED THE AMERICAN TAXPAYOR COMPLETE TRANSPARENCY – CONTACT YOUR CONGRESSPERSON AND DEMAND TO KNOW WHERE YOUR TAX MONEY IS GOING !  NO MORE BAILOUT FUNDS !

http://www.usa.gov/Contact/Elected.shtml

 

Top Bailout Watchdog Says Treasury Is Out Of Control

Bailout Watchdog: Where’s the Spending Plan?

Harvard professor Elizabeth Warren, the chairwoman of a congressional oversight panel, traveled to Washington Thursday to get answers on how Treasury is managing the unprecedented bailout.

The top congressional watchdog overseeing the nation’s financial bailout said Thursday she’s frustrated by the Treasury Department’s refusal to explain how it is doling out billions in taxpayer money.

Harvard law professor Elizabeth Warren, the chairwoman of a congressional oversight panel, traveled to Washington to get answers on how Treasury is managing the unprecedented bailout.

In an interview with The Associated Press, the Democratic appointee said she doesn’t understand why it’s taken so long for the Bush administration to explain its plan. Warren said she doesn’t want to believe it’s because there never was a plan for spending $700 billion in taxpayer money to rescue banks.

“I don’t buy a winter coat without a plan,” she said. “I can’t imagine how someone could think they were going to repair a failing economy and undertake spending billions of dollars in taxpayer money without a plan.”

Treasury Secretary Henry Paulson originally intended to use the money to buy risky loans from banks, freeing them to make new, safer loans. Shortly after the funds were approved, however, Paulson announced that $250 billion would instead be used to buy stock in U.S. banks.

“We’ve reversed directions more than once here, without any description of an overall strategy,” Warren said. “It’s not to say there’s not one, but I don’t think it should be such a well-hidden secret.”

Treasury spokeswoman Brookly Mclaughlin had no comment on Warren’s remarks. Treasury officials have said they are working toward several objectives, including stabilizing the financial markets, supporting the housing market and protecting taxpayers.

Nevertheless, the bailout has drawn criticisms from Republicans who oppose the huge new government program and from Democrats who want some of the money to be used to rework mortgages so homeowners can keep their houses.

The congressional oversight panel criticized Treasury last week for not saying exactly what problems they’re trying to fix or how the investments will fix them.

While Warren placed the blame squarely on Treasury for not laying out a clearer plan, she tempered any criticism of Congress, which placed few restrictions on the money as it hurriedly passed a law giving Treasury historic power to make multibillion-dollar decisions. Such requirements were omitted, she said, because the Bush administration pressured Congress to approve the bill quickly.

Paulson “was telling the Congress of the United States, ‘Do this right now,”‘ she said.

The five-member oversight panel is made up of three Democratic appointees and two Republicans. Senate Republican leader Mitch McConnell of Kentucky named outgoing Sen. John Sununu of New Hampshire to the panel Tuesday. Sununu has echoed Warren’s comments that taxpayers deserve to know how the money is being spent.

The panel is one of several entities monitoring the bailout, in addition to a special inspector general and the Government Accountability Office, a congressional auditor.

The GAO said in a critical report earlier this month that Treasury should toughen its monitoring of the bailout fund to ensure that banking institutions limit their top executives’ pay and comply with other restrictions.

http://www.foxnews.com/politics/2008/12/18/bailout-watchdog-wheres-spending-plan/

WHERE IS CONGRESS?  WHO WILL DEMAND ACCOUNTABILITY?  AND NOW CONGRESS WANTS TO SPEND BILLIONS ON AN AUTO INDUSTRY BAILOUT?

Taxpayer’s Investment In Bank Bailout Losing Money

AP IMPACT: Some bailout holdings down $9 billion

Stock intended to eventually earn taxpayers a profit as part of the Bush administration’s massive bank bailout has lost a third of its value — about $9 billion — in barely one month, according to an Associated Press analysis. Shares in virtually every bank that received federal money have remained below the prices the government negotiated.

Most of the Treasury Department’s investments since late October have been in preferred bank stocks, more than $180 billion worth, with investments in giants like Citigroup and JPMorgan Chase, and many small community banks. But the government also negotiated options to buy up to 1.2 billion shares of common bank stock that was valued at $27 billion.

The Treasury Department said it did not expect these common stock options to be profitable immediately and negotiated them so taxpayers could share in the wealth if the bank stocks recover.

Now, however, the value of that common stock is worth less than $18 billion. If the government exercised all its warrants to purchase the stock today, it would lose money on 51 of its 53 agreements. Taxpayers would be out $9.1 billion.

The markets are saying this plan isn’t going to work for the banks,” said Ross Levine, Tisch professor of economics at Brown University. “They’re asking where this plan is going.”

Potential losses among these common stocks include more than $3 billion for the administration’s biggest deal, a $45 billion injection into Citigroup Inc. The government gave the New York-based giant $25 billion on Oct. 28. In addition to preferred stock worth $1,000 per share, the deal included warrants to pick up 210 million shares of common stock at $17.85. In late November, the White House put together a plan to give Citibank another $20 billion. The deal also included warrants to pick up 254 million shares, with the price set at $10.61.

Citigroup stock has since fallen below $8.

More companies would be in the black, but the government used a 20-day stock price average to set the warrant price, meaning it willingly negotiated to pay roughly 25 percent more than the stock was worth on the day it signed the deals on behalf of taxpayers.

Nara Bancorp, created in 1989 to serve Southern California’s growing Korean-American community, borrowed $67 million from taxpayers on Nov. 21, when its stock was trading at $7.50 per share. But the government negotiated the option to buy 1 million shares of Nara common stock at $9.64, higher than its stock is currently trading.

“It’s a complete mistake to think this is a good investment for us,” said Paola Sapienza, a finance associate professor at Northwestern University’s Kellogg School of Management, who spearheaded a September protest of the bailout by more than 200 of the nation’s leading economists. “It’s a gamble. It’s like going to Las Vegas.”

http://news.yahoo.com/s/ap/20081205/ap_on_bi_ge/bailout_returns

 

Broken Bailout Promises -The Bailout Oversight Committee – The Positions Haven’t Been Filled

Remember the outrage when the Citizen’s found out that the Regulators at Fannie Mae and Freddie Mac were not only asleep at the switch but were actually fabricating accounting reports to make sure they made “bonus targets”? Where was the oversight?

Remember the outrage when the public was told that it would cost at least $1 Trillion Taxpayer Dollars to fix the mess and “buy” the “toxic mortgages”?

Remember the outrage when the Public found out that Congress had failed at its oversight responsibility? Remember how the Public was promised that the “Bailout” would be fully transparent, that like the Alaska Budget, all expenditures would be “on-line” and available for public view?  

Remember when the Public was promised that the “Bailout Money” wouldn’t be used to pay “Executive Bonuses” and “Dividends”?

Remember what you were promised?  

We were promised that the economy would colapse if the “toxic mortgage debt” was not “taken off the books.” Now we are told that the “bailout money” won’t be used to buy “toxic mortgage debt”.  http://kdka.com/national/paulson.bailout.meltdown.2.862368.html         http://www.usatoday.com/news/washington/2008-10-30-bush-banks_N.htm?csp=34

We were promised the “Bailout Cash” wouldn’t be used to pay “Bonuses” and “Dividends”. Banks and Wall Street Trading Houses are preparing to make year end Bonus & Didvidend Payments. Some Wall Street defenders claim that the Bonus and Dividend payments won’t come from ‘Bailout Funds”. These same defenders are silent when it is pointed out that the Banks and Wall Street Executives are taking “Bailout Cash” and putting in their “left pocket” while they take the “Dividend” and “Bonus Payments” out of their right pockets saying, “see – it is different cash”. Bottom line, without the “Bailout Cash” there would be no “Bonus” or “Dividends”.  http://www.usatoday.com/news/washington/2008-10-30-bush-banks_N.htm?csp=34         http://www.thestreet.com/story/10444961/1/new-york-ag-probing-bank-exec-payouts.html?puc  http://www.590klbj.com/news/article.aspx?id=481643

The promised transparency is nowhere to be found. There is nothing on-line, no one is working to put it on-line. The Fed has not made any of the activity available “on-line” and now refuses to disclose what it has done with the money. http://miami.indymedia.org/news/2008/11/12194.php                                          http://www.bloomberg.com/apps/news?pid=20601087&sid=aatlky_cH.tY&refer=home

We were promised that the “Bailout” would be subjected to extraordinary Oversight. http://www.wshu.org/news/story.php?ID=6103  – audio of Sen Dodd.

“Close federal oversight key to bailout’s success” “Most important, Congress will require more oversight for how the bailout funds are dispensed.” http://www.courierpostonline.com/apps/pbcs.dll/article?AID=/20081006/OPINION/810060306/1046

Bailout brings massive hiring, oversight challenges http://www.govexec.com/dailyfed/1008/101008nj1.htm

Candidates urge bailout oversight  http://www.stltoday.com/stltoday/news/stories.nsf/nation/story/BC1A1AC217680120862574CD00106C2D?OpenDocument

Barney Frank [of Fannie Mae notoriety] was joined by Rep. Christopher Shays, R-Conn., in telling “GMA” that they would insist that an oversight board be created to keep an eye on the country’s massive investment. “We will have a strong oversight board” that will report to Congress monthly, Frank said. http://abcnews.go.com/Business/Politics/Story?id=5855805&page=2

How then has almost 1/2 the “Bailout Money” been spent and Trillions in additional loans been made, without appointing a single member of the “oversight board” or hiring a single staff member. The only extraordinary thing, there is, literally and factually, no oversight.   

It is time to “SAY NO” to further “Bailout Money”.

Contact Your Congressperson & Senators here: http://www.congress.org/congressorg/home

Stop The Bailout Fiascos – The Plan Has Changed – The Promises Ignored

On September 29, 2008 the original “Bailout Bill” was defeated in the House of Representatives. After adding an amazing amount of additional spending the revised “bailout bill” passed four days later.

http://www.thestreet.com/story/10440683/1/sweetened-bailout-bill-sails-through-house.html

The Bailout was passed without “Congressional Hearings” because it was said that a “dire emergency” confronted the Nation and that Congress needed to purchase the “illiquid assets from the financial system” or as they were later called “The Toxic Mortgages” that may destroy the economy.

Now forgotten is the fact that a group of 400 internationally respected Economists warned the “Bailout” wouldn’t work. 

https://mcauleysworld.wordpress.com/2008/09/29/200-world-reknown-economists-speakout-against-bailout/  http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm http://www.npr.org/templates/story/story.php?storyId=95215972 

These economists warned that an entirely different approach was needed to truly free up the credit markets. ‘At this point I cannot identify a single good reason to do the bailout,’ said Dean Baker, co-director of the Centre for Economic and Policy Research. ‘Much of the country’s political and economic leadership has been running around raising the prospect of the Great Depression and a breakdown in the banking system,’ Baker said. ‘These stories are absolutely not true,’ he added. http://ipsnorthamerica.net/news.php?idnews=1729

Current “Bailout” activities maybe having the same affect as “pouring gasoline on a fire”.

What few American’s know, not all Banks supported the Bailout, “Nine of the largest U.S. banks were essentially arm-twisted last week into signing on for the first $125 billion in capital infusions.” http://news.yahoo.com/s/nm/20081024/bs_nm/us_financial_usa_banks 

Note that “Capital Infusions” were forced on these Banks, the Banks did not sell “toxic mortgage debts” to the FED as advertised.

The Bailout has failed. Between October 4, 2008 and November 12, 2008 the Stock market has dropped 2000 of the 5000 points lost since November 2007. Forty percent of the economic dive has occurred in the 5 weeks since the “Bailout” was approved. (From 13,300 on 12/7/07 to 8,300 on 11/12/08)  

http://www.mahalo.com/Dow_Jones_Industrial_Average     http://www.nyse.tv/stocks/archive/2007_11_01_archive.htm                    http://money.cnn.com/data/premarket/  (DJIA 8313 at 7:15 Am  11/13/08)             http://cyberlaw.stanford.edu/node/5882

You might recall a promise by Congress that the ‘Bailout” spending would be posted on-line, providing the Taxpaying Public complete transparency and the ability to track where our tax dollars were being spent. Not only have we not received “complete transparency”, but the American public is being denied even the most basic information on where the money is being spent.

http://www.openthegovernment.org/article/articleview/342/1/115/?TopicID=  

One article noted, “The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.”                                                                        

http://josh-of-arc.newsvine.com/_news/2008/11/12/2104122-fed-loans-2-trillion-but-wont-say-to-who

In other words, the Congress and the Administration are not implementing any of the “protections” they promised the public for their tax dollars.

BLOOMBERG.COM describes it this way, “Fed Defies Transparency Aim in Refusal to Disclose”,  The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.                                                    http://www.bloomberg.com/apps/news?pid=20601087&sid=ahdVHk_Ccoeg&refer=home 

 

In addition, few in the American Public realize the “Bailout” money is being used to pay for items never approved by Congress and vehemently opposed by nearly all of the American public during the pre-vote debate. A recent article titled, “Bail-Outrage: Misuse of Funds, Lack of Transparency a National Disgrace”, noted, “Many Americans are understandably outraged by the bailout fever that has gripped Washington this year. But even those who believe the bailouts are a “necessary evil” would have a hard time defending some of the bailout-related items that have come to light in recent days, including:

  • Financial institutions using TARP bailout money to pay executive bonuses. The firms, of course, say it’s “different” money and bonuses are key to retaining top employees. But if you need to come to the government for a handout, shouldn’t your executives forgo a bonus? Or shouldn’t the government make canceling bonuses a condition of getting aid, as is the case in Europe?
  • The Fed refusing to reveal who received almost $2 trillion in non-TARP loans, or what collateral it has accepted from “emergency” loans made to struggling firms, as Bloomberg reports.
  • The Treasury Department providing a tax break to banks involved in acquisitions that could amount to $140 billion. The Washington Post reveals the change to the tax code was issued on Sept. 30, while Congress was debating the $700 billion TARP bill.

The bailouts are bad enough. But this kind of chicanery and lack of transparency makes me recall a line from another time when fear and deceit dominated Washington: Have they no shame, at long last?

http://finance.yahoo.com/tech-ticker/article/125352/Bail-Outrage-Misuse-of-Funds-Lack-of-Transparency-a-National-Disgrace?tickers=GS,MS,JPM,BAC,C,WFC,XLF             

http://www.dailyherald.com/story/?id=249779

The only relief seen by the American public has come from private efforts made by the Mortgage Companies. An example is the recent announcements made by Citigroup, “Citigroup to Modify Terms for U.S. Mortgages” as reported by the Wall Street Journal. http://online.wsj.com/article/SB122636776229916053.html 

Citigroup’s actions are unrelated to any bailout activity. Why is Citigroup doing this? Because it makes good business sense for Citigroup, that is why. “The push by the New York Company’s Citi-Mortgage unit marks the latest effort by a financial institution to help ailing homeowners, which also can help lenders reduce loan losses.” [In other words, Citigroup doesn’t lose money when homeowners can stay in their homes and make payments]. “The company ultimately expects to reach 500,000 customers whose mortgages it owns. Roughly 130,000 of those borrowers are likely to see a reduction in their monthly loan payments, Citi-Mortgage said.” Citigroup’s efforts have been matched by J.P. Morgan Chase & Bank of America. http://online.wsj.com/article/SB122636776229916053.html

This is being done without the sale of “toxic debt” or “cash infusions”, it is being done by having the bank simply renegotiate its outstanding mortgages – it costs the taxpayer nothing

Contrary to what the public has been told, a very significant portion of Citigroup’s “bad mortgages” involve investment properties and not family residences. “Citi-Mortgage also is halting foreclosures for about 16,000 borrowers who are behind on their loan payments but are working with the company on a loan modification. About 10,000 of those borrowers live in their homes and are likely to get their mortgage terms reworked, while about 6,000 are investors, according to the company.” [Almost 40% of the mortgages in foreclosure are investment properties]. http://online.wsj.com/article/SB122636776229916053.html

Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned …. 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……. The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was “not the most effective way” to use the $700 billion bailout package, he said. ……. The announcement marked a major shift for the Administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.”  http://news.yahoo.com/s/ap/financial_meltdown

The Author of this article is showing their political bias when the fail to mention the roll of the Democratic Congress in this mess. 

The Democratic Congress is “leading the charge” for making the modifications.

The fact that the original legislation only allowed for, “H. R. 1424 As Amended; A bill to provide authority for the Federal Government to purchase and insure certain types of troubled assets” is not being discussed. The current change in direction was not authorized by the “Bailout Vote”.

The Washington Post was just one of the publications to confirm these facts, “Urgently shifting course …….  abandoning the centerpiece of its massive $700 billion economic rescue plan and exploring new ways to shore up not only banks but credit-card, auto-loan and other huge nonbank businesses. Democrats are pressing hard to include a multibillion-dollar bailout for faltering automakers, too, over Administration objections. Unimpressed by any of the talk on Wednesday, Wall Street dove ever lower.” http://washingtontimes.com/news/2008/nov/12/paulson-says-troubled-assets-will-not-be-purchased/

So now the “Bailout” money will go to pay bonuses not just for Wall Street Executives but for overpaid UAW & Auto Industry Executives too. Whether “credit card”, “auto loans” or “student loans” should be included in the “original bailout” was discussed by Congress and the Senate just 5 weeks ago. After consideration, the Congress and the Senate rejected proposals to include those items, after being added to the Administrations original “Bailout Proposal” by Democrats in Congress, the items were deleted in an attempt to obtain the necessary Republican support in the House.  The items were added back in by the Democratic Senate. They were not authorized in the original legislation.      

The proposed bailouts to what the Wall Street Journal refers to as “The Old American Industry” will cost taxpayers $375,000 per employee. A $75 Billion Dollar “Bailout” of the “Old” American auto industry will not save it. Chrysler LLC is not even a publicly owned company. It is a privately owned company. So how do we know who will really get the money the Government is being asked to give to Chrysler?

https://mcauleysworld.wordpress.com/2008/11/11/stop-the-detroit-3-bailout-375000-cost-per-employee-to-taxpayers/ 

https://mcauleysworld.wordpress.com/2008/11/07/obama-granholm-pelosi-waxman-dingell-the-death-of-american-automobile-manufacturing/

Given all the falsehoods about the first “Bailout” package, how can anyone be sure that the money will get to where they say they will spend it.

As to GM, Duetsche Bank stated a “bailout” would be needed to avert a collapse of GM and that even if GM received “bailout funds” and  “… GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” analyst Rod Lache said in a research note, essentially calling the company’s shares worthless with a price target of $0, reduced from $4.”  

http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5}

As to Chrysler, it has been reported that, “In the Chrysler-like approach, potentially 98% of the  company’s equity would be transferred to the UAW, VEBA, existing GM debt holders and the government,” Barclays’ analysts noted. VEBA is short for Voluntary Employees Beneficiary Association, a trust set up for managing health-care benefits to be overseen by the United Auto Workers of America. That would leave little for shareholders.” http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5}

 

Without private investment, how many more “cash infusions” will taxpayers be asked to make to reward bad business management? 

 

According to the U.S. Bureau of Economic Analysis motor vehicles, bodies, trailers, and parts represented less than 1% of the country’s entire gross domestic production in 2007. One half of that total is attributable to the “New Auto Industry” that isn’t asking for a “Bailout” nor is the “New Auto Industry” part of “Bailout” discussions.

http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5} . 

 

We are talking about Billions in bailouts for the “Old Auto Industry” that is responsible for less than 1/2 a percent of the Country’s Gross National Production. That is simply a bad bet for American consumers and the taxpaying public.

   

How many billions more will Congress throw at a problem they don’t know how to fix. Isn’t it time to stop “throwing good money after bad”. 

Is it time for the American taxpayer to say NO. Contact your Congressperson and Senator and demand that they schedule the hearings we should have had in the first place. CONGRESS IS NOT KEEPING THEIR PROMISES ABOUT THE BAILOUT. WHAT THEY ARE DOING IS NOT WORKING. WHAT THEY ARE DOING IS MAKING THINGS WORSE WHILE RUNNING UP YOUR TAX BILL.

Contact Your Congressperson & Senators here: http://www.congress.org/congressorg/home

One Click Access –you only need your “Zip Code” in the “Find Your Officials Tab”

Why isn’t the bailout working? Because the Government has done nothing to correct what caused the financial collapse. What caused the financial collapse? A change in lending rules that gave money to people who could not pay it back. The loans (car, credit card and home mortgages) were then packaged and sold as securities in America and around the world. Mortgages were written at 140% of the “inflated value” of the homes. Individuals were encouraged to “roll over” credit card debt, auto and student loans into their “mortgages”. Now that the “pyramid scheme” has collapsed the Government has done nothing to prevent it from happening again. NINJA & LIAR Loans are still the “law of the land”. Why won’t banks loan, why won’t investors buy the securities? They don’t want to get stuck with another group of “bad loans” or “bad investments”. The bailouts are simply rewarding the bad actors and preventing the tough but necessary changes we need to get the Country back on the right track.

WHERE WILL THIS ALL END – CONSIDER THIS

AIG’S NEW BAILOUT – November 10, 2008

The U.S. government reached a deal Sunday night to scrap its original $123 billion bailout of American International Group Inc. and replace it with a new $150 billion package, according to people familiar with the matter. Under the terms ironed out late Sunday, the government would give AIG more money, including $40 billion from the U.S. Treasury’s $700 billion Troubled Asset Relief Program. The $150 billion in government aid consists of a $60 billion loan, a $40 billion preferred-stock investment and $50 billion in capital.  

http://online.wsj.com/article/SB122627437470412029.html 

AND THIS

City Council: Detroit needs $10-billion bailout

 

The Detroit City Council passed a resolution today calling for a $10-billion bailout for the city of Detroit. The council passed the resolution today 7-1. Council President Pro Tem JoAnn Watson sponsored the resolution to use the money for public service employment, to fund mass transit plans and to place a moratorium on home foreclosures for two years. The resolution specifically requests the council meet with Mayor Ken Cockrel Jr., Gov. Jennifer Granholm, the state’s congressional delegation, U.S. House Speaker Nancy Pelosi and officials from President George W. Bush’s office and President-Elect Barack Obama’s transition team. “No city needs a bailout more than Detroit,”  http://www.detnews.com/apps/pbcs.dll/article?AID=2008811120455

Mayors want part of auto bailout

The mayors of four large Metro Detroit communities on Monday called for a share of the federal bailout sought by Detroit’s Big Three automakers to help redevelop shuttered facilities and factories.

The mayors of Warren, Sterling Heights, Livonia and Dearborn met at the Sterling Heights Public Library for about an hour to discuss the proposal. The mayors were joined by representatives from Gov. Jennifer Granholm’s office, Michigan’s congressional delegation, the Michigan Economic Development Corp., the Southeast Michigan Council of Governments and the Michigan Municipal League.

http://www.detnews.com/apps/pbcs.dll/article?AID=2008811120455

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