Bush overpaid banks tens of billions, says Congressional Oversight Panel

[bascule]

http://news.yahoo.com/s/ap/20090206/ap_on_go_ca_st_pe/bailout_oversight

 

Not sure how I missed this one (ten days old at this point) but a Congressional oversight panel's study shows that Paulson overvalued the stocks of ailing financial companies by tens of billions.

 

Paulson is gone, but Neel Kashkari, a holdover from the Bush Administration, remains in charge of the program, and has defended the Treasury Department's valuation of the stocks.

 

Neel Kashkari heads the "Office of Financial Stability." I wonder why this guy still has his job. Shouldn't Obama fire him for such a gross oversight?

[ecoli]

then they would have to fire themselves for letting the same type of policies to continue... taxpayers are losing money on these financial assets no matter how they we're originally valued.

[bascule]

then they would have to fire themselves for letting the same type of policies to continue... taxpayers are losing money on these financial assets no matter how they we're originally valued.

 

In the case of a president this is certainly an area I expect them to delegate... I'm just curious why Obama continues to delegate authority to this guy given this enormous lapse of confidence.

 

Firing him would be a first step in moving towards a new policy.

[Pangloss]

I agree. They need to fire that guy who's been giving the banks all that money, so that they get back to the business of giving these banks money.

 

(Er, wait?)

[iNow]

Pangloss - Giving the banks money [math]\ne[/math] Having those banks significantly over-valued by the guy in charge of doing so.

[Pangloss]

I know, I'm not criticizing bascule's point, I'm just pointing out the irony here.

[iNow]

[JohnB]

Help me out here.

 

The person who was tasked to value the banks stuffed up the valuation and the US gov then gave the banks too much money. This equals "Bush did it"?

 

All the billions were given on the personal order of the POTUS?

 

Didn't Congress have to approve the spending? If Congress did approve the money, how does it become Bush's fault?

 

Is this some bizarre twist of the US system? Regardless of who is POTUS all decisions during his term are his fault. (Or at least this is how you yanks portray it to the ROW.)

 

Since everything is the fault of the POTUS, why do you bother having the Congress?

 

Or is this a US thing where you just tend to blame the POTUS for everything, whether or not he had anything to do with it?

[iNow]

John - TARP package was passed by Congress in October. They created a unique office with unprecedented powers to release that money. However, once they approved the funds, they lost all control over them. Paulson and Bush are the ones that controlled it at that point.

 

Congress blanketly approved the spending up front. That was b/c of the speed at which this had to be done (Paulson and Bernanke went to Congress on Thursday, and basically told them that if they didn't have the $700B by Monday, the credit market would freeze... which it did.

 

This caused a quick approval, and the quickness caused a blaring lack of oversight and specific rules for that spending. Half of it was spent, and the way I'm thinking about it here is "blank check." In 2009, with Obama, the next half will very likely have smarter restrictions and requirements along with the spending since the first half failed to have any noticable effect on opening up credit markets.

 

 

My shorthand synopsis above misses a lot, and probably gets a few basic things wrong. However, there is much more here:

 

http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008

 

 

For more on the oversight (or lack thereof):

http://en.wikipedia.org/wiki/Oversight_of_the_Troubled_Assets_Relief_Program

 

The Emergency Economic Stabilization Act created the Troubled Assets Relief Program to administer up to $700 billion dollars. Several oversight mechanisms are established by the bill,

many of which were not immediately implemented.

Edited February 17, 2009 by iNow

[npts2020]

It is a joke to claim that the TARP program has any oversight. The most anyone can do is complain about it and eventually get the overseer removed. I shouldn't have given the company that will hire me the day I leave government service that $5 billion, oops, my bad............

[bascule]

The person who was tasked to value the banks stuffed up the valuation and the US gov then gave the banks too much money. This equals "Bush did it"?

 

Again, metonymy. If I say "The White House implored Congress..." I don't mean that the White House suddenly grew a mouth, sprouted legs, ripped itself up off its foundations, walked over to the Capitol building and started yelling at Congress. Clearly I'm talking about the administration inside the White House.

 

In this case "Bush" implies "The Bush Administration"

 

All the billions were given on the personal order of the POTUS?

 

On the personal order of his Treasury Secretary and the head of the "Office of Financial Stability"

 

In other words, his duly appointed underlings.

 

Didn't Congress have to approve the spending? If Congress did approve the money, how does it become Bush's fault?

 

Congress approved a bill written by Bush's treasury secretary which gives authority over spending to... Bush's treasury secretary, after Bush implored them to pass it.

 

Congress is certainly culpable, but they're just patsies. They placed their trust in the president and his administration in a time of emergency, and once again that trust was abused by the administration.

 

Is this some bizarre twist of the US system? Regardless of who is POTUS all decisions during his term are his fault.

 

Are you arguing that a President isn't culpable for the actions of his administration?

Edited February 17, 2009 by bascule

[Pangloss]

I agree with bascule -- responsibility is responsibility.

 

That having been said, I'm not sure this mistake wouldn't have been made by any administration, and it was made by the 535 members of Congress too (which at the time included the current President of the United States). They seem to have learned their lesson, but they made more mistakes with the stimulus package, and already show signs of making additional errors as we go past it. (Though I must say I'm actually looking forward to the day when Sean Penn has to take his shoes off before he boards John Travolta's G5.)

[bascule]

I think it's pretty sad when we have to chide Congress for putting too much trust in the executive branch.

 

That said, we are talking about $700,000,000,000 and I wish it came with more strings attached.

 

Oddly enough, we didn't see any Congressional Republicans with large posters illustrating how if you took 700 billion $1 bills and put them end to end that they'd circle the earth 10 times. Funny how that works.

[npts2020]

I think it's pretty sad when we have to chide Congress for putting too much trust in the executive branch.

 

That said, we are talking about $700,000,000,000 and I wish it came with more strings attached.

 

Oddly enough, we didn't see any Congressional Republicans with large posters illustrating how if you took 700 billion $1 bills and put them end to end that they'd circle the earth 10 times. Funny how that works.

 

Or a little over $2,300 for every man, woman, and child in America. I fail to see how a nation already in serious debt expects to inspire confidence in its economy by claiming that the solution to its economic problems is to create more debt with no concrete solution for being able to pay it off. If it is necessary for the federal government to intervene in the economy then the gov ought to be spending the money directly, rather than giving it to surrogates who may or may not use the money in any beneficial manner and who are even less accountable.

[Pangloss]

By giving us $13/week, of course. Silly goose.

[iNow]

Why does every frakkin thread we have lately turn into personal venting against the stimulus/bailouts?

 

 

Please, people... There is a topic.

 

Although, it would make for an interesting psychology thread, the fact that no matter how peripherally the stimulus or bailout is mentioned, people start ranting.

 

 

 

Bascule (or others) - I don't suppose you've read anywhere that there is a way to recover that money we overpaid for the financial companies?

[bascule]

Bascule (or others) - I don't suppose you've read anywhere that there is a way to recover that money we overpaid for the financial companies?

 

I think step one would be firing the guy who gave them too much money in the first place and still insists we gave them the right amount

[npts2020]

Why does every frakkin thread we have lately turn into personal venting against the stimulus/bailouts?

 

 

Please, people... There is a topic.

 

Although, it would make for an interesting psychology thread, the fact that no matter how peripherally the stimulus or bailout is mentioned, people start ranting.

 

 

 

Bascule (or others) - I don't suppose you've read anywhere that there is a way to recover that money we overpaid for the financial companies?

 

Unless some sort of criminal activity can be proven there is no way to recover the money (and even then only if those convicted have assets to seize). Basically, the money was given to the treasury secretary to spend in any manner he saw fit (the B.S. about not being intended for the auto manufacturers was just that, without basis-even if it was only for financial institutions it could have been given to GMAC, Fordcredit, etc). Anybody not liking the way the money is spent has the sole recourse of complaining after the fact and other than altruism there is no obligation to spend the money in any beneficial manner. The bailouts from last year and this year are the biggest money heists in the history of our planet and will make a few people rich while perpetuating an untenable situation for a little while longer and eventually impoverishing our government, to the point of being unable to provide services and possibly even govern. BTW I would be very surprised if too much money was not given out, and even more surprised if anything is done about it other than finger-pointing and obfuscation.

[JohnB]

iNow, thanks for that. Your system is sooo different from ours. It's sometimes hard to get my head around what's going on.

 

bascule, apologies. The first version of the post mentioned how your system was confusing me. I deleted the section but posted thinking it was still in.

Are you arguing that a President isn't culpable for the actions of his administration?

No, I'm trying to understand why the Members of Congress seem to get a free ride.

 

Example;

POTUS introduces Bill 1234, Lower House passes Bill 1234. Senate greatly modifies Bill 1234 and sends it to Lower House. Lower House passes modifications and sends to POTUS. POTUS signs Bill 1234 into law.

 

It all goes pear shaped. POTUS is blamed.

 

That's the bit I don't get. Why don't the Congressmen who voted for the Bill get blamed too? It doesn't matter which side the POTUS comes from, it's always "Bush did this" or "Clinton did that". Yet every bad decision they passed into law must have been approved by Congress, so why is this not generally mentioned?

 

What was "The Bush Administration"? Down here we would say "The Rudd Government" in the same fashion. By this we mean the Prime Minister, Kevin Rudd (Oh God, how on earth did we elect a man called "Kevin" to run our country?), all his Ministers of State and every politician (from both Houses) whose vote counts towards his party.

 

Consequently every polly that votes for a Bill has to explain him/herself to the electorate as they all share the blame equally. It doesn't look like yours does this.

 

You guys grew up with it, so I'm sure your system looks simple and logical to you, but from the outside things aren't quite so clear cut.

On the personal order of his Treasury Secretary and the head of the "Office of Financial Stability"

I suppose this is another difference. Such actions here would be done by "The Treasurer", an elected Member of Parliment. (Actually the spot is second only to the position of PM.)

Congress is certainly culpable, but they're just patsies. They placed their trust in the president and his administration in a time of emergency

This appears to be an attitudinal difference. Cries of "It's not my fault! I trusted him and he cheated" would be met here with "You're supposed to be more careful than that. Your arse is ours come election time, sonny."

 

Could Americans please note, I'm not having a dig at your system, just trying to understand it.

[iNow]

Could Americans please note, I'm not having a dig at your system, just trying to understand it.

 

Don't worry, mate... Not only does our system often deserve a dig, but we're trying to understand it, too.