The Bush bailout plan proposal is silent on limits on salaries, bonuses, stock options or any financial penalties of any kinds for executives of firms bailed out by taxpayers.... despite that fact that top investment firm executives each take home millions annually.
For a glaring example, see Fury at $2.5 Billion Bonus for Lehman's New York Staff.
In essence, Wall Street executives are protected by the Bush bailout plan, while "Main Street" Americans take 100% of the fiscal responsibility for the executives' bad decisions.
At best, taxpayers will see only partial repayment of bad mortgage loans bought by the Treasury Department for two reasons: 1. The Treasury Department plans to pay premium prices to the bailed out banks, and 2. Under the Section 7 of Bush's Proposed BailoutPplan, "... the Secretary may use the proceeds of the sale of any securities issued... including (for) the payment of administrative expenses."
At worst, of course, Americans taxpayers will see no repayment at all.
Bottom line: The Treasury Department plans to spend proceeds from the sale of foreclosed homes, and they aren't accountable to anyone for how they spend those funds, no matter how inappropriate or even fraudulent the expenditures.
Summary of Bush's Blank-Check Bailout Plan
In summary, under the Bush administration's Draft Proposal for Bailout Plan, the biggest institutions in the financial services industries would be protected from their losses and the executives would be shielded from any negative consequences.
U.S. taxpayers carry the burden (i.e. own) of up to $1 trillion or more of "illiquid assets," for which there is no plan or budget to collect the "assets" in order to reimburse taxpayers. This is the equivalent of a new tax on every U.S. household of from $2,000 to $5,000.
Meanwhile, those bailed out suffer no financial consequences and retain all present and future profits. And the brokers, realtors and investment bankers keep all their rich profits and commissions from these loans gone bad.
The End Result
The Bush administration's $700 billion to $1 trillion bail-out plan for its donors, cronies and pals in the financial services industry will cripple the next president from undertaking universal health care, strengthening public education, shoring up Social Security, and so much more that... coincidentally?... the Bush administration despises.
All this just six weeks before the '08 presidential election, and just one short week before Congress adjourns until after the election... when Republicans and the Bush administration will presumably lose all opportunity to push legislation of this gargantuan magnitude.
Coincidentally fortuitous timing or one last ultra-greedy power grab by the cynical Bush administration?
Based on the Bush administration's checkered history, I vote for the latter.
RECOMMENDED READING
- TPMCafe: What Wall Street Should Do To Get Its Blank Check by Harvard and UC Berkeley economist Robert Reich, former U.S. Secretary of Labor
- New York Times: No Deal by Princeton economist Paul Krugman
- Brookings Institute: Concerns about the Treasury Rescue Plan
- Politico.com: Many Economists Skeptical of Bailout
- ThinkProgress.com: Bush’s Legacy Of Squandering Taxpayer Money
