Halloween came early this year. The U.S. House and Senate played a trick on the American taxpayer to treat Wall Street and their favorite pet projects in a bailout bill that many observers say will cost the taxpayers over $800 billion and fail to appropriately address any of the issues that led to the disaster in the first place.
In the rush to passage, Senators took advantage of the “must pass” hype to add their favorite pet earmark to the bill. So hard-working American taxpayers are now providing subsidies to rum producers in the Caribbean and to manufacturers of toy wooden arrows as part of the bailout. It was an act of piracy that would make Captain Jack Sparrow proud.
The provisions of the bailout itself are no better.
Basically, the bill puts the government in the mortgage business, allowing the Secretary of the Treasury to use taxpayer money to buy up the bad mortgages. It does not however have one single provision to stop the lending practices that led to all the bad mortgages in the first place. And even a cursory search of the Web reveals that advertising is happening right now to encourage people who can’t pay to renegotiate their mortgages at adjustable, lower-than-normal rates because of the government bailout. So government-mandated lending practices have resulted in a $700 billion hole, which the taxpayers are now being forced to fill, and because of the bailout the same unqualified borrowers are being told to start the process over again. It’s like watching the government break ground on a second hole right beside the one the taxpayers have just been forced to fill.
The political talking points always included the word “oversight”. Unfortunately for the taxpayer, “oversight” never made it past the political talking point area. The bill does not deconstruct Fannie Mae or Freddie Mac. It does not require that the financial institutions that use the bailout money submit their balance sheets or have an independent audit. It does not call for those who created this mess and then profited from it to be held accountable for their actions.
It was particularly objectionable to find out that the American taxpayer will be paying “limited compensation” to those executives who participated in the creation of the debacle. Who will be paying limited compensation to the unsuspecting stockholders, many of them seniors, who have seen their life savings wiped out by the failure of the lending institutions those executives ran? Who will be paying limited compensation to the business owners who will experience downturns in the next months because of the fallout from the mess those executives made? Or the workers laid off because of those downturns?
But those folks will be on the hook to ensure that the government and corporate executives whose mismanagement and greed created the financial problems they are now experiencing receive “only” limited compensation.
It’s time for us to close our doors to government officials who treat themselves from our pockets. We need to tell Washington that Halloween is over, and that it is time for all the trick-or-treaters to go home.
Thankfully, we have the ability to do so. It is called the ballot box. This year, let’s use it!