TARP: MORE OF THE SAME BAD POLICIES
They say the definition of insanity is doing the same thingover and over again, expecting a different result. Yet, that is exactlywhat is being done as we ship out the next $350 billion of taxpayermoney to Treasury to cover Wall Street's paper losses.
When will we have wise leaders who rise and understand thatunless the mortgage foreclosure crisis tide is turned back, Wall Streetwill not heal. We must heal Main Street's mortgage real estate marketsfirst. Congress is looking out of the wrong end of the telescope.
In the fall, some in Congress sent out the first $350 oftaxpayer money, hastily crafted, for a completely opaque bailout``plan'' that proponents argued would stabilize our economy. Has thathappened? Yesterday, the Dow dipped below 8,000. Last month'sforeclosure filings were up 40 percent from the previous year. Andnearly 700,000 more jobs were lost last month alone.
Our economy is still suffering, with more jobs lost everyday, while the promise of the bailout has been broken. The bailoutmoney was given through a hasty process, without enough thought,without any guidelines, and the proper Federal regulators to do thejob. The Federal Deposit Insurance Company, the Securities and ExchangeCommission, and HUD, were sidelined as Treasury was moved into thedriver's seat.
Taking advantage of Treasury's boon, Wall Street's gamblingcasinos used the money to buy up other banks to build up their reservesand get bigger, rather than unfreezing credit so that local marketscould work, or engaging in foreclosure workouts, which is the realcongressional intent of the original bill.
U.S. Treasury nominee, Tim Geithner--he is the gentlemanwho didn't pay his taxes--noted in his confirmation hearing that therewere serious concerns about transparency, accountability, and the goalsof the bailout program. But he didn't say how he was going to fix it.
How does the administration even know that it needs $350billion more if it hasn't audited and doesn't know what happened to thefirst $350? Where did that money go?
Congress is taking the lazy man's way out, shirking theimmense responsibility to appropriately and thoughtfully guide how themoney is spent, ensuring our taxpayers' money is being used prudently.
When Secretary Paulson pushed for this additional bankbailout, he said, Well, the government might recoup some of its money.But now the truth becomes clearer. The Congressional Budget Officeestimates that of the first $247 billion in bailout payments made justthrough last December, they are saying taxpayers already will end upfooting over $64 billion, or 26 percent, of the bill. That is justwhere we are today.
So if we are on the hook for paying 26 percent of the firsttranche, should the people paying the bill not be the beneficiaries ofa comparable share of the total funds to do mortgage workouts at thelocal level? That would be about $180 billion. But the bill that passedthe House last night commits as little as $40 billion to foreclosureworkouts. In other words, the bottom line really doesn't add up.
The Treasury has been inappropriately charged withrestoring the health of our markets. But their job is to sell U.S. debton Wall Street and to collect our taxes. They really aren't designed todo bank regulation or examination or real estate lending or housingworkouts or real estate accounting. That isthe job of the FDIC, with its bank examiners; and the SEC, with itsaccountants; and the Department of Housing and Urban Development.
America cannot really afford to pay this next $350 billion,just as we didn't pay for the first tranche. We borrowed it all. And wedon't know if the Senate will take up the bill that the House passedlast night to give some guidance on how those original dollars are tobe spent.
So we know one fact is certain: Wall Street sure has a lotof power down here in Washington to put at the foot of the taxpayersthe bill for all of their wrongdoing. Congress should not have sent outanother $350 billion.
But what the gambling houses on Wall Street did was createmoney recklessly by leveraging mortgages way beyond what the underlyingasset could return. And those banks are so powerful and arrogant andthey breed such special relationships inside our Federal Government,they are not only spared the discipline rules of the market we must alllive by, they are spared prosecution so far. They are so powerful, theyrepeatedly abuse their power, and then run to us, the taxpayers, aboutevery 10 years, to bail them out of their excesses.
Wall Street banks do have special pull here in Washingtonthrough the Treasury and the Federal Reserve, their campaigncontributions, and the revolving door between Washington and New Yorkwhich, unless you have lived here, you really can't understand.
They consistently enrich themselves by indebting theAmerican people for their excesses. They have committed crimes muchlarger than the last excesses this time from the old savings and loancrisis of the 1980s and 1990s, and they put those losses on theAmerican people too, and it became the third largest component of ourlong-term debt.
The Wall Street bankers, meanwhile, make plenty of moneyenriching themselves. You know what? They win on both ends because theyend up selling the U.S. Government debt through bonds that they issue.It's a win-win for them and it's a loss-loss for us.
I just want to say, Mr. Speaker, in closing, that we shoulduse the proper agencies to restore rigor to our market--the FDIC andthe SEC, with their examination powers and their accounting powers--andwe shouldn't just put the money down the blind hole at the U.S.Treasury that leads directly through a tunnel to Wall Street.