One of the most infuriating things about our current economic crisis, and frankly our recent political and corporate culture is the complete lack of accountability and lack of memory by both political officials and the media that cover them.
One may have thought it could not get any worse, then we hear how John Thain, well into the current financial collapse, worked to pass out bonuses to Merrill executives before it got swallowed up by Bank of America and spent a cool million redecorating his office.
Now we hear this idea of creating a “bad bank” to place all of the toxic instruments held by former investment banks to loosen up credit markets. This was the purpose of the TARP! This is what the emergency $700 billion appropriated by Congress was for. Remember.
It wouldn’t have taken a genius to predict when former Treasury Secretary Hank Paulson pulled the last minute switcheroo and decided to directly fund good and troubled banks alike instead of following the plan to buy back the toxic securities, that banks would be back at the trough claiming their hands are tied by the massive waste they are holding.
As distasteful as it may have been to fund the very rogues who got us into trouble, the purpose was narrow and directed: take out the toxic waste that is freezing up the credit markets. This would allow lending to take place and government to hold these securities until a time that more of their value could be realized. Once that narrow directive was lost, it became Christmas in Washington. Once it no longer was about taking the toxic waste out of the system, there was no reason any and all industries and groups couldn’t and wouldn’t line up for their share. And they did.
But I have read at least three stories that talked about the bad bank concept as if it were a shiny new idea without noting that this was the original plan. It was only last fall for heaven sake.
Tags: Bad bank, credit markets, TARP, Treasury Secretary Paulson
