Bailout En Route?

23:52 Thu 02 Oct 2008. Updated: 17:34 28 Jan 2009
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The Senate passed it, but given the fact that Senators are better insulated from public opinion, I’m not surprised. I continue to regard the bailout as utterly wrong, and even if Obama were perfect in every other way, I would regard his pushing of it as a reason to not support him. I certainly think that anyone who sees McCain and Obama in agreement on something like this should be deeply suspicious. This is a fantastic example of the well connected enriching themselves at taxpayer expense.

Here are some more unsavory details about the bill, from an article by Mike Whitney: according to Brad Sherman, the bill is likely to benefit foreign investors:

The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20 that it can’t be sold to the Treasury.

Why? Quite possibly because these foreign banks would otherwise be taking huge legal action against the Wall Street investment banks—that’s what Whitney suggests, and frankly that seems entirely plausible. I suspect there’s more going on than that, but that that’s a part of the whole thing.

Another issue is that according the AP:

While the plan broadly aims to prevent banks from profiting on the sale of troubled assets to the government, there is an exception made for assets acquired in a merger or buyout, or from companies that have filed for bankruptcy.

Hmm, what might that cover? JP Morgan buying WaMu and Citi buying Wachovia? It could turn out that they could sell their “bad assets” to the government for more than they actually paid for them in their purchases… which also wouldn’t surprise me.

There are real problems in the financial system, and they require real solutions. Throwing money at the same people who created those problems is not a real solution.

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