Bailout Balderdash

So a 3 page bill aimed at bringing some measure of immediate relief for the mortgage crisis and the banks that speculated on so much bad credit has now turned into a 422 page barrage of BS.

I'm not surprised that this Bailout Bill has turned into another Government Boondoggle.
Are you?

This bill, now signed into law, includes
from Cnet

millions in tax breaks and related pork for kids' wooden arrows, Puerto Rican rum producers, auto race tracks, and corporations operating in American Samoa. (The likely explanation for the latter: StarKist has a large tuna-canning operation in American Samoa. And StarKist's parent company happens to be located in the district of House Speaker Nancy Pelosi.)

The bailout bill also gives the Internal Revenue Service new authority to conduct undercover operations. It would immunize the IRS from a passel of federal laws, including permitting IRS agents to run businesses for an extended sting operation, to open their own personal bank accounts with U.S. tax dollars, and so on. (Think IRS agents posing as accountants or tax preparers and saying, "I'm not sure if that deduction is entirely legal, but it'll save you $1,000. Want to take it?") That section had expired as of January 1, 2008, and would now be renewed.

There are also some Green - Tech measures in this bill that I don't necessarily disagree with...but they don't belong in this particular bill at this particular time.

The bill has become, in other words, something almost unrelated to the business of bailing out Wall Street. The Beltway term for this is a "Christmas tree bill," meaning everyone gets to hang their favorite spending projects on it--though by the time Congress gets it through, it more closely resembles a slop bucket.

And what about the potential loopholes?

Some loopholes exist. It's possible for a bank to buy $100 billion of bad debt--perhaps in the form of subprime mortgages that are becoming quickly worthless-- declare bankruptcy, and sell it to the Treasury Department for $120 billion, or $200 billion. In other words, although the Treasury Department is supposed to look out for the best interests of taxpayers, there's no law forbidding such profits in the case of firms involved in bankruptcy, receivership, or mergers.

Section 115 of the law says that the administration can, after notifying Congress and waiting 15 days, purchase and hold $700 billion of assets "at any one time." (It can buy and hold $350 billion without waiting.)
This, too, is a potential loophole. It permits the Treasury Department to buy up, say, $700 billion in 2008, sell those assets off gradually over the next year at a (probable) loss, and repeat the same process in 2009. Losses to taxpayers, in other words, could exceed $700 billion. Although the Treasury Department is instructed to try to avoid losses, yeah whatever...the text of the law does not forbid that scenario.

Now onto my basic bugbear: Executive Compensation
Section 111 is titled "Executive Compensation and Corporate Governance."
It does not include, however, any statutory dollar limit on how high executive salaries of TARP bailout recipients can be. Instead, it lets Treasury Secretary Henry Paulson, the former CEO of Goldman Sachs, come up with "appropriate standards." In addition, only the top five executives will have their golden parachutes limited; all the rest will remain untouched, even if their second-tier salaries and bonuses happen to be in the millions or tens of millions of dollars.

Bear Stearns CEO James Cayne made $61.3 million from selling his shares a day after the JP Morgan bailout. Daniel Mudd, CEO of Fannie Mae, was replaced last month; he made $11.6 million in 2007. Richard Syron was chairman and CEO of Freddie Mac from 2003 until last month. He made $19.8 million last year. Martin Sullivan was ousted as president and CEO of AIG this summer, and was paid a $47 million severance package.

Pigs at the trough indeed