Archive for ‘bailout’

July 27, 2009

‘The Legs of a Potential Scandal’

New York magazine’s Joe Hagan writes about the suspicions surrounding Goldman Sachs, insurance giant AIG, and last fall’s TARP bailout:

The AIG rescue is the incident from which all other Goldman conspiracy theories spring — the original sin, in a sense, of Goldman’s current public tarring. It’s the act that first made the average man on the street sit up and say, “Hey, wait a minute. The secretary of the Treasury [i.e. Henry Paulson], who used to be the Goldman CEO, just spent $85 billion to buy a failing insurance giant that happened to owe his former firm a lot of money. Does that smell right to you?” It also seems to have the legs of a potential scandal, with Neil Barofsky, the inspector general overseeing the Troubled Asset Relief Program, conducting an audit of the buyout.
Then again, if you’ve just posted $3.44 billion in second-quarter profits in an environment where, say, Morgan Stanley just reported a $1.26 billion loss, what does it matter what people say? . . .

Read the whole thing. These three facts — (a) Goldman has spectacularly profited, at a time of rising unemployment, foreclosures and bank failures, (b) Goldman was the primary beneficiary of the TARP bailout, and (c) Goldman’s former CEO was the driving force behind TARP — are hard to reconcile in any way that doesn’t raise the suspicion of corruption.

SIGTARP Barofsky’s investigations are clearly raising questions embarrassing to the people who backed the bailout.

BTW, a friend e-mails to say that Barofsky’s estimate of $23.7 trillion TARP liability is a number that “assumes The End of the World As We Know It, or Armageddon, in short.” The e-mailer adds:

The number is correct, but the vast majority of the dollars are called, precisely, “contingent liabilities.” They may, and they may NOT, become actual liabilities. [Bailout Nation author] Barry Ritholtz, who tends to be a lefty politically but a very hard-ass “numbers” guy pointed that out.
Yes, the bailout is unpopular and yes, it seems that Goldman Sachs has benefitted far beyond the laws of probability. Ritholtz agrees with that, too. And yes, CitiBank should be closed and sold for scrap.
But be careful with that $23T stuff.

The key part is, “The number is correct.” The likelihood that taxpayers will actually be required to fork over $23.7 trillion is remote, but it’s not a number that Barosky pulled out of a hat.

Oh, and speaking of scandal, Instpundit reminds us that today is the official publication date for Michelle Malkin’s Culture of Corruption: Obama And His Team of Tax Cheats, Crooks, and Cronies. It’s the Best. Book. Evah! Today at her blog, Michelle looks at Obama crony Valerie Jarrett. This afternoon, Michelle will be on Sean Hannity’s radio show and his Fox News TV show.

So buy two copies and give one to a liberal friend, just to annoy him.

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July 26, 2009

Geithner and the Scapegoat Sweepstakes

Thanks to Smitty for watchdogging the latest headlines about SIGTARP Neil Barofsky while I was on the road to Richmond yesterday. It’s important to see the big picture in this battle between Barofsky and Treasury Secretary Timothy Geithner:

The Wall Street bailout has been unpopular from its inception. . . . Now, we see unemployment soaring (more than 15% in Michigan, near 12% in California) and consumer confidence falling, while the stock market surges upward. You can’t blame people for suspecting that massive taxpayer-funded assistance to financial giants like AIG, Goldman Sachs and Bank of America might have something to do with this widening chasm between prosperity on Wall Street and misery on Main Street. . . .
Polls indicate a growing perception that the Obama administration is mismanaging the economy, with special favors for politically connected Wall Street fat cats at the expense of ordinary American taxpayers. . . .
With another approaching crisis in banking and forecasts that unemployment will continue rising for months to come, Obama will eventually start looking for a scapegoat. Though once hailed as an economic savior, the nominee who was “too big to fail,” Geithner is now odds-on favorite to win the Scapegoat Sweepstakes. SIGTARP Barofsky’s watchdogging of the bailout “black hole” may be enough to push Geithner across the finish line.

Read the whole thing, which includes a “document dump” with Barofsky’s quarterly IG report and other important documents on this important aspect of IG-Gate.

July 22, 2009

Rule 3 on IG-Gate (Plus, Notes forNewbies on Aggregation Method)

There’s a Memeorandum thread this morning linking the Hot Air IG-Gate Update, which got Instalanched. and is also linked by Frugal Cafe. Note that the Memeorandum thread also includes Joe Weber’s Washington Times interview with fired AmeriCorps IG Gerald Walpin:

“For a second I was thinking, ‘Why do I need all of this?’ I’ll just resign and go back to my good legal practice in New York,” Gerald Walpin told The Washington Times’ “America’s Morning News” radio show Tuesday.
“But I would then be part of the apparatus that is totally torpedoing the inspectors general,” Mr. Walpin said. “The watchdog would not really be a watchdog. He’d just be afraid of his shadow.” . . .

That’s new stuff, see? It was linked together with the IG-Gate Update in a post at Right Wing News. If several different blogs aggregate that stuff together, it creates sort of a center of gravity in the ‘sphere that is picked up by the Memeorandum algorithm.

And the Right Wing News post also includes today’s Washington Post story about Neil Barofsky — SIGTARP, special inspector general for the TARP bailout — who raised hell on Capitol Hill yesterday. As of 7 a.m., that story was not included in the Memeorandum thread, but given that Sen. Chuck Grassley has been defending Barofsky’s office against Treasury Secretary Timothy Geithner, (see Grassley’s June 17 letter to Geithner in PDF) it’s very much part of the same story.

Building up a Memeorandum thread, with everybody commenting on the same news stories and cross-linking, is what Rule 3 is about. Newbies should always hat-tip Memeorandum when they do this. Even if the increase in your traffic is not immediately significant, every time somebody links your blog, it boosts your Technorati ranking — you did remember to install Technorati, right? — and, eventually, you’ll be showing up on Memeorandum’s radar.

Think of it this way: When one dog in the neighborhood starts barking, they all start barking. That’s why Jimmie Bise dubbed us The Million Hit Squad.

If you need more background on the IG-Gate story, try the Mother of All Updates.

UPDATE: Yet more juicy SIGTARP goodness:

Barofsky testified that taxpayers aren’t being told what most TARP recipients are doing with their money or what their investments are worth and may never be told exactly how their taxpayer dollars are being used.
At a Government Oversight and Reform Committee hearing, one lawmaker compared Treasury to convicted Ponzi scheme artist Bernie Madoff, accused Treasury of trying to undermine Barofsky’s independence and threatened to haul Treasury Secretary Timothy Geithner before the panel if he didn’t adopt the IG’s recommendations.
“For us to get past this economic situation that we find ourselves in, the public has to believe that we’re doing the right thing,” said Rep. Elijah Cummings (D-Md.). “If we can’t show them that we are doing the right thing with their money, we’re going to have problems.” (Emphasis added.)

When Democrats start talking like that, you know it spells trouble for Geithner.

UPDATE II: Text of closing statement by Chairman Towns:

Earnings at the largest banks and the bank holding companies such as JP Morgan and Goldman Sachs are up, yet lending remains down. It is unacceptable that profits go up, while lending goes down. The taxpayers have invested very large amounts of money in these banks, but what have we gotten in return? It remains unclear.
The taxpayers deserve to know how their tax dollars are being spent.
The Treasury Department needs to publish full and detailed information on the use of TARP funds and publish the value of the TARP portfolio on a monthly basis. They have that information and they should make it public.
Moreover, Treasury also requires the largest banks to file monthly reports showing the dollar value of their new lending. That should be made public also.
If Treasury doesn’t put this information up on its website, this Committee will. And if Treasury doesn’t turn over this information voluntarily, Secretary Geithner will be brought before the Committee to explain.
What we have heard today convinces me that one of the best things Congress did when it created the TARP was to also create the Special Inspector General to oversee TARP spending. I can now understand why the Treasury Department would like to rein in the SIGTARP. But we are not going to let that happen.

Heh.

UPDATE III: Just got off the phone with a source on Capitol Hill who tells me yesterday’s Hot Air IG-Gate Update is a big hit with Republicans. Speaking of Republicans, here’s Rep. Darrell Issa:

The Special Inspector General of the Troubled Asset Relief Program (SIGTARP) Neil Barofsky testified today at a hearing of the House Committee on Oversight and Government Reform that the Treasury Department has “repeatedly failed” to implement SIGTARP recommendations that would reveal how Treasury is using taxpayer dollars. At the conclusion of the hearing, Ranking Member Darrell Issa (R-CA) asked Chairman Towns to bring Treasury Secretary Timothy Geithner before the Committee to address the questions raised by SIGTARP’s report. . . .
“We heard today that full transparency, which we called for, the President asked for and this Administration promised, is being blocked by the bureaucracy which often says ‘just trust and we will deliver,’” Issa said. “Until we have full transparency, we will never be able to know how much risk Treasury is assuming on behalf of the taxpayers. This Administration promised an ‘unprecedented’ level of accountability and transparency. They set their own standard. Now we’re going to hold them to it.”

Click here for Issa’s statement.
Click here for Neil Barofsky’s testimony.
Click here for a copy of the SIGTARP Report.

July 20, 2009

SIGTARP Strikes: IG Barofsky Report SaysTreasury Not Tracking Bailout Cash

The watchdog bites Tim Geithner:

The top watchdog over the financial bailout package said the Treasury Department is rejecting “common sense” by not requiring banks receiving billions of dollars in government money to say how they are using the money.
In a report to be released on Monday, Neil Barofsky said banks that have received money from the $700 billion bailout package passed last year are able to indicate how they are using taxpayer money and that Treasury should require banks to be more transparent. . . .
Barofsky is the Special Inspector General over the Troubled Asset Relief Program (SIGTARP) that was passed by Congress in October. . . .

Read the whole thing. This SIGTARP report is a perfect example of why the Obama adminstration hates IGs. The Democrats just want to shovel money out the door and don’t care who gets it, except to be sure their well-connected friends get their share.

According to the liberal neo-Keynesian economic gospel, as long as the federal government does X-billion dollars of deficit spending, that will produce X-plus-Y amount of stimulus value (where Y = Magic Government Spending Multiplier Effect) without regard to whether the money ends up feeding orphans or supplying the mistresses of Goldman Sachs executives with bustiers and garter belts

Unfortunately for liberals, the stupid taxpayers can never seem to comprehend the nuances of neo-Keynesian theory the way Nobel Prize-winning genius Paul Krugman does.

No matter how many times they’re lectured about this “stimulus”/bailout brilliance, the idiots who pay the taxes get a little miffed to discover that their great-grandchildren’s future has been hocked to pay for new wallpaper and wainscoting in the executive lavatory of a giant banking conglomerate which — as every expert in Washington explained last fall — was so frantically in need of cash that the branch managers were sending tellers to sell plasma to the blood bank, merely to prevent a complete catastrophic meltdown in the global finance system.

Those stupid taxpayers are like that. They have a habit of remembering irrelevant minor details like those 90-point headlines on the front pages of all the newspapers:

CRISIS LOOMS: WORLD ECONOMY TEETERS ON BRINK OF FINAL APOCALYPSE; CONGRESS DESPERATELY FIGHTS TO AVERT ECONOMIC DOOMSDAY; PLAGUES OF LOCUSTS, FROGS FEARED

Damned idiot taxpayers. What do they know about economics and budgets and stuff that only people with Ivy League Ph.Ds can ever hope to understand?

(H/T: Memeorandum.)

July 20, 2009

VIDEO: Extended-Release Stimulusol(TM)

From The Nose On Your Face:

Just give me the Rohypnol and maybe something for the next-day discomfort after being forcibly gang-sodomized by SEIU, IRS, EPA, UAW, NEA, NARAL, ACORN, PPFA, AFSCME . . .

July 19, 2009

Going Postal? U.S. Postal Service SeeksBailout; Could Miss October Payroll

Via NewsAlert, this shocker:

Four unions representing the nation’s postal workers are pleading for a meeting with the White House to address possible funding shortfalls for workers’ payroll and retiree health benefits, according to a letter obtained by CongressDaily.
The presidents of the American Postal Workers Union, National Rural Letter Carriers’ Association, National Association of Letter Carriers and National Postal Mailhandlers Union co-signed the Tuesday letter to White House Deputy Chief of Staff Jim Messina, warning that the U.S. Postal Service is at risk of defaulting on a $5.4 billion payment to prefund retiree health benefits at the end of September.
The letter alleges that USPS “may not be able to make payroll in October and will be forced to issue IOUs instead.” . . .

Read the whole thing. Imagine that: A taxpayer-subsidized, union-dominated, government-regulated monopoly having financial problems . . .

It’s a crisis! Wonder if the president has those cardigans ready?

July 16, 2009

Gay Motors and the Beefcake Bailout

Now that Obama has taken over GM, henceforth Chevrolet will be known as the Gaymobile:

For a local movie promotion a week ago aimed at gay buyers, General Motors’ Chevrolet sponsored an online video on YouTube featuring the “Bumble Bee Boys in Briefs” — a couple of buff “go-go boys” wearing only Speedo-type swimsuits with the letters CAMARO stitched across the behind. In the video, they are washing a Camaro. . . .
The video was produced to promote Chevrolet Gay Days at the Movies in Los Angeles, part of an ongoing outreach program to minority groups and the gay-lesbian-bisexual-transgender community. The movie was a screening of the new Transformers movie, chock full of GM vehicles including Bumblebee, a Camaro.

If you see a guy driving a Chevy . . . well, NTTAWWT.

UPDATE: I’m thinking Chevrolet needs a new slogan: “We’re here! We’re queer! We’re driving Chevy!”

UPDATE II: In keeping with their LBGT/Obama agenda, General Motors today unveiled a new logo:

July 8, 2009

IG-Gate Update

Fox News obtains notes from a meeting that led to the firing of AmeriCorps Inspector General Gerald Walpin:

The informal meeting notes, taken by CNCS Counsel Frank Trinity, said that board members were indeed concerned about Walpin’s “behavior.” . . .
But the account also shows that Chairman Alan Solomont stated concern about Walpin’s accusations against the board and not his mental health as the apparent cause for the dispute that led to Walpin’s termination. . . .
A congressional investigator who participated in a three-hour meeting with Trinity on Monday told FOXNews.com that it was clear the board sought Walpin’s ouster because of hurt feelings and professional friction, even though inspectors general are supposed to be free to challenge staff at their respective agencies. The investigator, who requested anonymity, argued the White House did not thoroughly review the matter.
“It was the disagreements between the IG and the senior management at the agency that provoked the board to remove Walpin,” the investigator said. “The senior people at the agency chafed under Walpin’s oversight. … They communicated this to the board, which rubber-stamped senior management. [The board] took it to the White House, which rubber-stamped the board.”

Hmmm. Is Fox’s source also my source? Then why . . . Never mind. As long as it advances the story, I’m not particularly concerned with who gets what. Meanwhile, Democrats in Congress are working to muzzle federal watchdogs in the financial sector:

Inspectors general at five financial regulatory agencies are objecting to legislation that would elevate their positions to the presidential-appointment level, arguing that the move would compromise their ability to conduct independent investigations.
The bill would elevate the five officials at the Federal Reserve Board of Governors, the Commodity Futures Trading Commission, the National Credit Union Administration, the Securities and Exchange Commission, and the Pension Benefit Guaranty Corp.

Lots of graft opportunities in those agencies, y’see. Don’t need independent watchdogs snooping around while the Chicago Way is put into operation on Wall Street. And here’s some news on the “SIGTARP” story I overlooked last week:

Congress did not legislate transparency for its own members’ manipulation of the bailout fund, known as the Troubled Assets Relief Program, or TARP. . . .
[T]he Treasury Department steered $135 million in TARP money to a bank in Hawaii after Sen. Daniel K. Inouye’s staff contacted bank regulators on its behalf. Mr. Inouye, a Democrat, is Hawaii’s senior senator. Nothing unusual so far: Members of Congress have been lobbying for home-state banks almost since TARP started — so much so that congressional influence is the subject of a TARP inspector general report due out this summer. In one prominent case, Rep. Maxine Waters (D-Calif.) arranged a meeting between regulators and OneUnited of Massachusetts, a bank in which her husband held shares. Rep. Barney Frank (D-Mass.) later wrote language into the bailout bill that effectively directed the Treasury to give special consideration to OneUnited, and he followed up with a call to Treasury. The bank got $12 million. (Emphasis added.)

That forthcoming report from “SIGTARP” — special inspector general Neil Barofsky — should be lots of fun.

June 6, 2009

I’m not sure this was part of the narrative

by Smitty (h/t Instapundit)

The Weekly Standard reports:

Senator Lamar Alexander introduced the “Auto Stock for Every Taxpayer Act” today, which would “require the Treasury to distribute to individual taxpayers all its stock in General Motors (GM) and Chrysler within one year following the emergence of the companies from bankruptcy proceedings.”

I see a few problems with this:

  • The Treasury Department stole those shares fair and square. Loss of the asset could have deleterious effects on various graft, kickback, and corruption schemes. Distributing shares has not been deemed The Right Thing to Do.
  • If people have something to lose, they may cease to vote as if they’ve nothing to lose. Thus, this is a violation of the ‘total enslavement’ doctrine.
  • Some of the lumpentproletariat may even figure out the game, and become harder to manipulate. Heaven forbid, they may even become as educated as someone who went to Yale or Havard, given enough generations. This would not do.
  • Lamar Alexander is a Republican, and thus cannot be permitted to diminish the glow of The One.
  • He Who Must Not Be Named would be displeased.
May 4, 2009

The Fundamentals Still Suck

My latest American Spectator column:

It was Black Monday, Sept. 15, 2008. Major financial institutions were sliding into bankruptcy and the Dow Jones average was plummeting. Sen. John McCain, however, was speaking confidently. “The fundamentals of our economy are strong,” the Republican presidential candidate told supporters at a Florida campaign rally.
A chorus of GOP mouthpieces echoed their candidate’s assertion, but four days later, after Treasury Secretary Henry Paulson outlined the Bush administration’s bailout plans, conservative blogger Michelle Malkin erupted in fury. “I have had it with Pollyanna conservatives who continue to parrot the ‘fundamentals of the market are great!’ line,” Malkin declared. “The fundamentals of the market suck. The fundamentals of capitalism have been sabotaged.”
Malkin was right. The market closed that day with the Dow at 11,388.44, nearly 3,000 points below its October 2007 peak, but if you had sold all your stocks that day…

Please read the whole thing.