On April 10th, Barack Obama will hold a major meeting at the White House to discuss further policy initiatives to support the economy. Already in his two short months in office, Obama has passed the stimulus plan, and increased funds for TARP.
“… small businesses are starting to get money that allows them to keep their doors open, make payroll,” Mr. Obama said. “And that is going to contribute to overall economic growth, as well as help make sure that people are able to keep their jobs…That has the effect of not only putting money in the pockets of people but also contributing to stabilization of the housing market,” he said.
But many doubts remain, and new doubts are arising. For one, many of Barack Obama’s West Wing advisors apparently received bonuses last year for companies that have received TARP mone; the same ‘crime’ apparently that many of the AIG employees who were to receive bonuses last month committed.
The headliner is Larry Summers, Obama’s chief economic advisor. Summers, former head of Harvard, pulled in a cool $2.7 million in speaking fees paid by firms at the heart of the financial crisis, including Citigroup, Goldman Sachs, JPMorgan, Merrill Lynch, Bank of America Corp. and the now-defunct Lehman Brothers. He pulled in another $5.2 million from D.E. Shaw, a hedge fund for which he served as managing director from October 2006 until joining the administration.
Thomas E. Donilon, Obama’s deputy national security adviser, was paid $3.9 million by the power law firm O’Melveny & Myers to represent clients including two firms that receieved federal bailout funds: Citigroup and Goldman Sachs.
White House Counsel Greg Craig earned $1.7 million in private practice representing an exiled Bolivian president, a Panamanian lawmaker wanted by the U.S. government for allegedly murdering a U.S. soldier and a tech billionaire accused of securities fraud and various sensational drug and sex crimes.
The question that of course comes up to mind is if it was wrong for AIG employees to accept bonus severance from their company that was agreed upon last year and to be paid this year, isn’t it wrong for Obama’s advisor to take that same money? And shouldn’t he demand to give it back, or be branded a hypocrite? Additionally, Barack Obama and Congressional Democrats castigated AIG executives saying that they could not be trusted because they took bonuses. So are we now to be suspicious of Larry Summers et. al. as well?
And here is what compounds the matter. There are many banks that were forced to take TARP money by the government, never needed it in the first place, and now want to pay it back because they fear harsh government oversight that has been proposed, such as the Pay for Performance Act that would regulate executive pay. And the Obama Administration is denying their repayment of funds. That is right; instead of getting taxpayer money back, Obama would rather have control over these financial institutions for a longer period of time than necessary. That speaks volumes about the real goal of the Obama White House. The TARP money is less about the effect of the cash, and more about increased government power and leverage.
The federal government will have a problem when they finally have to decide what to do with the multitude of bailouts that are ongoing. Whether or not they were necessary is not the point now. What’s done is done. That said, we will eventually need an ‘exit strategy’; and we may find that Iraq was easier to leave.
Take A.I.G. for example. So far, you and I, the great taxpayers of this country, have dumped $180 Billion into a company that many now say is already bankrupt. They may need another $100 Billion to make it through this crisis, and even then there is almost no chance that we get back the money we invested. Former AIG chairman Stan Greenberg (who was ousted by Democrat NY Attorny General Andrew Cuomo before this mess occurred) has stated that right now he sees no way that the government plan will ever recoup the money invested in AIG, because there is no endgame.
Just to compound their hypocrisy, the Obama Administration is looking for ways to avoid Congressional regulations on bailouts! That is right, on one hand they want to continue control, but on the other they don’t want Congress dictating to them what needs to be done. From the Washington Post:
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.
Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.
The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.
So basically, they want a loophole or a backdoor so they (being the White House) can do what they want. So far, these loopholes have not come under significant Congressional scrutiny.
This is the problem with any bureaucracy. Once they show they are willing to provide assistance to any group of people, it is almost impossible to wean said people off the government roll.
Next, the auto bailouts are coming. We have spent around $7 Billion for saving Chrysler (small peanuts compared to AIG). But now, it appears it was all for naught. Unless Fiat can come in to save the day, the Obama Administration has basically ensured the demise of the#3 U.S. automaker. Why? Apparently, we havefinally found out how big is small enough to fail.
Then there is GM, the big enchilada. It is estimated that almost 1 million people nationwide depend on GM either directly or indirectly for their income, and that doesn’t even include the farther reaching ripple effects if the company goes under. But now the White House has set a fixed deadline of 60 days, otherwise they will have to enter bankruptcy. The problem is, no one has asked on salient question: What if there is no saving GM? We must accept that is a possibility. Can you imagine the mess? It is completely possible, six months from now, a bankruptcy court tells us that GM is too far gone to save, at which time the current head of GM will have to shut down all operations, and lay off 150,00 GM employees, and tell approximately 2 million pensioners and retirees that they are left out in the cold.
Oh, by the way, the person in charge of GM now? His name? Barack H. Obama.
Can you imagine what this would mean? The President could theoretically have to (at least symbolically) lay off the most people in any single layoff in history. It would make Reagan’s firing of the air traffic controllers in 1982 look like child’s play. Rick Wagoner’s job may just be the first of many that may litter the economic landscape before this is all done.
The reality is that Obama and Geithner (and for the matter Hank Paulson and George W. Bush) have never had a proper ‘exit strategy’ for the bonus mess. When Obama is refusing to take TARP money back form banks that want to get out of the program, what does that say about the program itself? It says that the White House has not yet formed a vision of how these bailouts will wind down, how the government will slowly step back and let the free market reign again. That is a dangerous precedent.
Someone needs to speak truth to power. The hypocrisy that is running rampant among the Obama White House is being challenged by no one, including the legislative branch, other executive branch members, and most certainly not the media. Some of these proposals go to the very heart of what it means to be the United States of America, and it is slightly scary to see that no one seems to care what is done, as long as it is done in Barack Obama’s name.