Tuesday

Who didn’t see this coming?



From MSNBC: http://www.msnbc.msn.com/id/30315680

WASHINGTON - Taxpayers are increasingly exposed to losses and the government is more vulnerable to fraud under Obama administration initiatives that have created a federal bank bailout program of “unprecedented scope,” a government report finds.

You mean another federal program fraught with waste, corruption and abuses. Is it possible that the taxpayers have again been left holding the bag for government incompetence? How could this be? We were given such adamant assurances that there would be stringent oversight. President Bush, President Obama, the congress and senate all assured us that this program was necessary and that there were significant safeguards in place to protect the taxpayer.

It seems that the total cost of the program was misreported as well. We were told that $740 billion dollars was the price tag and yet:

Overall, the report says the public-private partnership — using Treasury, Federal Reserve and private investor money — could total $2 trillion. The financial markets responded positively to the program when the Obama administration announced it last month, but the administration is still putting final touches on its implementation.

“The sheer size of the program ... is so large and the leverage being provided to the private equity participants so beneficial, that the taxpayer risk is many times that of the private parties, thereby potentially skewing the economic incentives,” the report states.

It can’t be, how could the government act so recklessly, how could they betray our trust in such a blatant and malfeasant manner? Ah, but it gets better.

In particular, the report cited the private-public partnership that would purchase troubled real estate-related securities from financial institutions. Under plans unveiled by Treasury, for every $1 of private investment, Treasury would invest $1 and could provide another dollar in a nonrecourse loan. That money could then leverage a loan from another government fund backed mostly by the Federal Reserve, a step that Barofsky says would dilute the incentive for private fund managers to exercise due diligence.

So the same greedy and corrupt CEOs who masterminded the economic disaster have now found a way to manipulate the system to their advantage. Is anyone surprised? The government has chummed the waters with the blood of the taxpayers and the sharks are closing in for the kill.

Treasury officials maintain that the public-private program is the best response to the troubled loans and securities clogging the system. They say that if government did nothing, the financial crisis could linger for years and that if government intervened alone by closing troubled banks and taking over their bad assets, taxpayers would be at greater risk.

They argue that private investors and taxpayers would share profits equally and that investors would be the first to lose if the asset purchase ends up losing money.

So, they are arguing that this is the best they could come up with in a pinch. This albatross is the most effective program that the “best and brightest” could author? Where is the creativity that spawned such innovative ideas as the credit default swap and derivatives? If the best we can do is an inefficient and egregious waste of taxpayer money, entrusted to the same malfeasant CEOs and Legislators who created the mess, we are truly doomed.

“In light of the fact that the American taxpayer has been asked to fund this extraordinary effort to stabilize the financial system, it is not unreasonable that the public be told how those funds have been used by TARP recipients,” the report states.

What a novel concept. Accountability. That is the one thing that has been conspicuously missing in this entire fiasco. No one has been held accountable for their actions. Legislators have drafted laws that helped cause the mess, CEOs acted in unscrupulous manners, Presidents and lawmakers spent taxpayer money in wasteful and unconstitutional ways and in the end we can’t even figure out where these trillions of dollars are going. Seems appropriate when you consider the loony tunes are now running the asylum.

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