It dents my American pride to admit that a corrupt crony capitalist state like the PRC shows superior leadership and vision on the green retooling of their automotive industry.  Talk about a lost opportunity!  Instead of using the economic meltdown to recast Detroit as I suggested back in November, the Dems have chosen to throw a bunch of money into the bottomless pit of the Big Three – Obama, like a plastic-suit wearing auto dealer,  is even promising to warranty your next GM purchase!  WTF?!?

In retrospect we should have just pulled the plug last fall, and put those billions into Tesla.

While every talking head from Capitol Hill to the late night talk show hosts are focussed on how the corruptly crafted and rushed-through bailout legislation led to the infamous AIG executive incompetence bonuses, the real problem is far more insidious – nothing precludes the TARP recipient firms from using our cash to lobby for favorable legislation – which they have apparently taken to doing with gusto.

I’ve never really bought the argument that corporate lobbying is a form of ‘free speech.’  However, getting that banned is a change I doubt I’ll see in my lifetime.  Still, even the stupidest Federal Judge should be able to see how dangerous it is to allow a private firm to ‘recycle’ tax dollars into lobbying efforts to craft favorable legislation for the recipient.    It’s the type of feedback loop that distorts the market and creates institutional ‘winners and losers.’

• In any governmental bailout of a private firm, we need to insist on the following basic principles:
• The government holds an initial majority stake in the firm
• The goals of the investment and required restructuring and changes are clearly defined and milestones established
• The public stake is reduced in step with the achievement of the milestones
• The firm is barred from any and all political lobbying efforts while the government investment remains.

For the period of time in which the government is a large stakeholder in a private firm, the organization becomes, to some extent, a quasi-governmental organization.  It would be like having the US Post Office spend hundreds of thousands of dollars to lobby Congress to expand their budget!!

Ron points out he tried to amend the Wall Street Con Artist bailout plan to cap executive bonuses, but his provision was stripped out.   He snipes at Obama a bit over the bungling of the Bailout II (which did happen on Obama’s watch), but I think the problem is still Harry Reid, the wrong man for the Senate Majority Leader position.

Ron and Senator Snowe are trying to reintroduce the provision as standalone legislation:

“… he and Snowe have a remedy: they are reintroducing their stimulus provision as a stand-alone bill, only they are getting even stricter with bailed-out institutions. Instead of capping bonuses at $100,000, they are lowering the level to $25,000. The law would cover all recipients of taxpayer TARP money, as well as those firms — like AIG — which have received money outside of the Troubled Asset Relief Program. And it would deal with bonuses issued in 2008. If a company refuses to give up the bonuses, the amount that exceeded $25,000 would be taxed at 35 percent.

“They are either going to have to pay it back or they are going to be taxed,” said the Senator. “And I think that is going to be pretty hard when they are already getting taxpayer money.”

Good luck Senator Wyden!

The New York Times reports tonight, although without any proper attribution to Lewis Carroll:

U.S. Bank Bailout to Rely in Part on Private Money

Wall Street helped produce the global financial and economic crisis. Now, as the Obama administration prepares to unveil a revised bailout plan for the banking system, policy makers hope Wall Street can be part of the solution.

Administration officials said the plan, to be announced Tuesday, was likely to depend in part on the willingness of private investors other than banks — like hedge funds, private equity funds and perhaps even insurance companies — to buy the contaminating assets that wiped out the capital of many banks.

The officials say they are counting on the profit motive to create a market for those assets. The government would guarantee a floor value, officials say, as a way to overcome investors’ reluctance to buy them.

Details of the new plan, which were still being worked out during the weekend, are sketchy. And they are likely to remain so even after Treasury Secretary Timothy F. Geithner announces the plan on Tuesday.

Apparently, those reports of Obama continuing Bush’s “faith-based” initiatives are barely scratching the surface…

Guest post from Spy Buddy:

Well folks get ready for a prolonged recession-the Senate Finance Committee cleared the nomination of Timothy Geithner as treasury secretary.  Is this the best Obama can do? In fact, Geithner could have been a prime candidate for a Bush appointment due to his incompetence or corruption.

First, Geithner didn’t pay his 2001 and 2002 taxes until he was nominated-CNBC has reported the IRS waived Geithner fines, what you or I would have had to pay.  Obama, and other Geithner apologists, say this was an oversight.  Lets see, not paying your taxes for four years in a row is an oversight?  He either thinks he is above the law or he’s just incompetent.

A second reason, and a more important, Geithner should not be confirmed is due to his previous position as president of the Federal Reserve Bank of New York.  There he worked closely with Henry Paulson on several projects, bailing out AIG and TARP- is this an oversight, plain incompetence or corruption? I don’t need to talk about AIG since everyone remembers how AIG executives partied on taxpayer dollars in California. Remember the purpose of TARP was to help provide liquidity for banks so they could lend money to people who were refinancing or lending to small businesses etc. So under this guise, Paulson and gang distributed funds with no attention to ensuring that banks would use it to increase lending.  This is one of the biggest rip offs of public funds since the no bid contracts that the Cheney/Bush administration gave away to their buddies.

Geithner is one of many available bankers and/or economists available to treasury secretary—believe me there is a glut in the market, just check out any street corner in NYC.  Lets get one who can pass the character test and one who pays taxes as well as one who is competent.

Amen to that!  Thanks, Spy Buddy!

*Update* Geithner Says China Is Manipulating Its Currency – no shit, Sherlock!  Let’s see what you plan to do about it.

An interesting story hitting the wires from the Washington Post this afternoon:

Senior Bush administration officials are preparing to ask lawmakers for the second half of the $700 billion financial rescue package despite intense opposition in Congress and then have President Bush use his veto if the request is voted down, three sources familiar with the matter said.

Atrios immediately read this as Dubya trying to get his clumsy hands on the cash even though there’s almost no time left in his term, so I guess  this part must have been added in a subsequent revision by the Post:

The initiative, which is being coordinated with the Obama transition team, may be taken within days, the sources said, speaking on condition of anonymity because no announcement has been made.

. . . Under the emergency rescue legislation approved by Congress in October, the administration must inform lawmakers that it wants access to the second installment of $350 billion. Unless Congress passes a resolution rejecting the request within 15 days, the Treasury can begin to tap the funds. If Congress does turn down the request, the president could veto the resolution and then the Treasury could proceed.

The plan now being crafted by the Bush administration is not finalized. By unsheathing the veto threat, the Bush administration could make it more likely that the Obama administration would get the rest of the rescue funds. Only if Congress overrides the veto would the money be blocked. A congressional source said advocates of the plan are now exploring whether there are enough votes in the Senate to override a veto.

“There have been discussions between the administration and the transition about how to proceed should the president-elect determine that he wants to have those funds available on January 20th,” said Robert Gibbs, spokesman for the Obama transition team. “No final decisions have been made, but we want to be ready to act if needed.”

Hmmmm.  Could it be that with 10 days left to go, the Bushites have finally decided it’s okay to do something for the good of the country?  Or do they have some ulterior motive (as usual)?  And how does this play into Obama’s strategy regarding his stimulus proposals — is he willing to let Congress bat it around because he’s looking forward to having a separate slush fund to work with?  Inquiring minds want to know.

(Cross-posted at Firedoglake.)

(Image via Suitably Flip.)

One of the tidbits of news that seeped out in the wake of the roundly criticized weekend bailout of Citigroup was this report from Justin Rood of ABC News:

AIG, Citibank and a number of other federally bailed-out financial institutions have no plans to cancel hundreds of millions of dollars in sports team sponsorships, even as they take billions in taxpayer support, ABC News has found.

In boom times, the sponsorships were seen as a way to advertise the firms’ “brands” and appeal to potential customers.

I’d like to join the call from skippy the bush kangaroo and a pair of righty blogs that U.S. taxpayers deserve a share of the action here.  But rather than replacing the existing names, I think this should be treated as a co-branding opportunity — “Citi Taxpayers Field,” “Wachovia Taxpayers Center,” etc. — just to make sure everybody knows who owes us some payback.

As an alternative, I’d be willing to support simply naming every arena or stadium involved after Barack Obama, if only to see if it would make Grover Norquist‘s head explode.

Makes you *wish* it was socialism, but it’s turning into outright kleptocracy:

Banks to Continue Paying Dividends
Bailout Money Is for Lending, Critics Say

U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.

The government said it was giving banks more money so they could make more loans. Dollars paid to shareholders don’t serve that purpose, but Treasury officials say that suspending quarterly dividend payments would have deterred banks from participating in the voluntary program.

As with Iraq reconstruction and Katrina, laissez-faire ideology trumps reality. With Bremer and Brown, the principals involved had little experience in handling the emergency they faced or the foresight to marshall government power to benefit the many. Paulson has been presented as this awesome and brilliant financier, whereas what he’s demonstrating is total incompetence in handling this crisis, mixed with a singular ability to consider only the needs of his banking brethren.

In the British version of the bailout plan, the government put up taxpayer funds in return for receiving warrants (future shares in banks), suspended corporate dividends, and a requirement that the bailout money be paid out in loans. In other words, the goal was to help get the banks on their feet AND help the general economy moving again.

In the U.S. Treasury plan, the first version (“Let’s buy all their toxic assets”) was quickly discarded as unfathomably stupid. Plan B was to become part-owners in the banks (“Socialism!”), but apparently with no other safeguards to make sure the money isn’t being used for anything other than doing the public good. So the banks are using it to purchase other banks, hoarding it to pad their balance sheets, giving out executive bonuses, and paying dividends to their own shareholders.

Anything, in other words, but what the bailout is supposed to achieve. The whole thing is turning into a direct siphoning of taxpayer funds into the pockets of bankers and corporate shareholders.

Ideological blindness mixed with incompetence got us Iraq and Katrina. We shouldn’t be surprised if the bailout plan turns out the same way.

Conspiracy-Theory Buddy alerts me to the bizarre utterances of Repug CongrAssclown Trent Franks of Arizona who decided to spend his ‘bailout bill’ discussion time ranting about the need to preemptively attack Iran.  What kind of fish-eyed fools elect an assclown like this?  Well Representative Assclown is up for reelection this year, make sure to give some money to his opponent Thrasher, who hopefully will give him a thrashing.  And before you whine about safe seat, etc., just remember – they said all that about Pombo too and we kicked his out of his comfy seat!

WaPo:

The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis.

During testimony before the House Budget Committee, Peter R. Orszag — Congress’s top bookkeeper — said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems.

“Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values,” Orszag said in his testimony. “Establishing clearer prices might reveal those institutions to be insolvent.”
…
Such companies “look solvent today only because it’s kind of hidden,” Orszag said. “They actually are insolvent” already, he said.
…
In yesterday’s interview, Orszag said, “The key question is: What are we buying and what are we paying for it?“

The $700B bailout is sounding more and more like applying bandage before checking to see how deep the wound goes. Maybe they should figure out first if it’s a scratch or a sucking chest wound.