April 6, 2008
Monday Madness - Where’s MY Bailout?
Is taxpayer generosity misplaced?
Uncle Giveth…
There is a curious frenzy to prop up the major instigators of the housing and financial crises in the US. The only requirement for a billion dollar bailout is behaving irresponsibly and profiting immensely while so doing. Thus we see oil companies, tobacco companies, housing lenders, commercial lenders, builders, and big-time speculators reap billions from taxpayers despite their own folly. Meanwhile millions of us taxpayers are struggling to keep our dream home and our paycheck.
If you live in San Diego and particularly East County, it’s safe to assume that you are NOT among those with big government connections. You are not skimming hundreds of millions for yourself from some big financial company. You are not contributing millions to the Republican party. And of course, you are not getting a big bailout. I know that you’re asking, just as I am asking: Where’s MY Bailout? And I want you to really believe that when I say ‘Where’s my Bailout’, I’m also asking for you. It’s only fair that after I get mine, you should get something too.
Cynthia Tucker at the Atlanta Journal-Constitution asks “Are bailouts only for the big shots?” She points to the hypocrisy of Congressional Republicans; “Last week , they rushed to put together a massive handout to home builders, mortgage companies and speculators — among the prime architects of the housing bubble — but refused to go along with Democrats who wanted to give struggling homeowners a similar boost.”
An anonymous writer at AMERICAblog discusses the effects of bankruptcy reform of recent years: “It was the kind of “reform” that screwed over real people.” And even as “all the key financial players were working to make bankruptcy harder on average Americans, the financial services industry was veering unregulated to the chaos we have today.” Which is why your credit card interest rate is now allowed to reach 30% -even your drug dealer would be embarrassed to charge that much. Finally the article states; “on the same day the Federal Reserve Chairman and others were testified before a Senate panel to justify the $30 billion taxpayer backed bailout of Bear Stearns, the Senate defeated efforts to reform the nation’s bankruptcy laws.”
Patrick.net has a few gripes too. He notes the huge piles of essentially free money flowing from the Fed to the banks and asks why the rate has risen to 8% for a loan with jumbo fixed rates at Wells Fargo. Savers get less, borrowers pay more and the bankers are fat and happy. On the Bear Stearns debacle Patrick hits another nerve- according to one of his readers; “Did everyone forget that Wall St. bonuses get paid in march? The Fed just guaranteed all of Bear’s bonus checks will clear, $3+ billion!” Nice, huh? Where’s mine?
This is a real estate blog, so I’ll spare you my vitriol concerning the $18B subsidy to the rich oil companies, and I won’t even mention subsidies for corn, tobacco, sugar and other mega industries, or their negative effect upon struggling farmers around the world and the taxpayers of the US. I’ll avoid comment on the trillions of dollars committed to the ‘war on terror’ and the generous gifts we allow our congresspeople and county supervisors to give to their supporters constituency. Oh, I could go on, but where’s mine?
Boe Lindgren writes at activerain and wants to know about the; “Six billion dollar “bail out” for builders.“. He seems to feel that the people who overbuilt in the first place, contributing to today’s problems, shouldn’t be rewarded and encouraged to build more unsellable homes.
You’ve heard about the bailout of Countrywide by Bank of America but have you heard about the executives’ punishment for running the mortgage company into the ground? According to the Daily Briefing by Colin Barr there were harsh words from Senator Clinton and others for company chief Angelo Mozilo who has reaped hundreds of millions of dollars in recent years by selling Countrywide shares and expected a severance package exceeding $37M. Who said ‘words will never hurt me’? Countrywide president David Sambol is punished too, being offered only “$28 million in cash and stock if he sticks around for three years as the combined company’s head of mortgage operations…” Were it not for the scrutiny, the man would likely be offered far more. How far would those hundreds of millions go if it were used to the customers’ and investors’ benefit instead of the defective executives’?
Finally, in Too Big to Bail, Alex Epstein tells us that these financial firms are thought to be so critical to US stability that they can always count on government bailouts. That encourages them to take risks that small companies and individuals don’t dare. So far, they are correct. Those who remember the S&L bailout of the last century are seeing it all over again today. So long as they have influence on government and the silence of the public, they will always have this guarantee. And, of course, the big shot executives have nothing at all to worry about. Only the little people will suffer. Little people like me — where’s MY bailout, dammit!?!
…Uncle Taketh away
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[data from generally reliable sources, please comment on any errors!]
