by Deb Cupples | Saturday, President Bush met with the finance ministers of seven industrialized countries. Apparently, he's getting serious about trying to solve our global economic crises -- instead of merely looking for ways to funnel tax dollars to private firms (i.e., to the human beings who make those firms' decisions and suck shareholder dollars out of said firms).
Just weeks ago, the Bush Administration adamantly wanted to devote $700+ billion to a string-free bailout. After Congress had its say, some thin strings were attached, but largely The Bailout Plan involved forcing us taxpayers to buy toxic assets from companies whose executives had recklessly insisted on buying those foreseeably toxic assets in the first place.
Yesterday, the Bush Administration expressed willingness to change course. The New York Times reports:
"Two weeks after persuading Congress to let it spend $700 billion to buy distressed securities tied to mortgages, the Bush administration has put that idea aside in favor of a new approach that would have the government inject capital directly into the nation’s banks — in effect, partially nationalizing the industry.
"As recently as Sept. 23, senior officials had publicly derided proposals by Democrats to have the government take ownership stakes in banks.
"The Treasury Department’s surprising turnaround on the issue of buying stock in banks, which has now become its primary focus, has raised questions about whether the administration squandered valuable time in trying to sell Congress on a plan that officials had failed to think through in advance.
"It has also raised questions about whether the administration’s deep philosophical aversion to government ownership in private companies hindered its ability to look at all options for stabilizing the markets." (NY Times)
Raised questions? It was downright obvious, to all of us who were watching, that the Bush Administration had not put much thought into the original Bailout Plan.
Administration officials just knew that they wanted to funnel 700+ billion tax dollars -- with no strings attached -- to private firms whose executives had made really bad investment decisions. And the Administration used the same urgency-based sales tactics as it had used when selling us taxpayers on the Iraq war.
The Bush Administration's "turnaround" really is remarkable. The Times notes:
"As recently as late September, the idea of letting the government buy part of the banking system had been unthinkable in the Bush administration. To many officials, such intervention seemed like a European-style government intrusion in the markets."
Analytical onlookers cannot imagine why government "intrusion" had been "unthinkable" to our president or to the folks that he'd appointed to head relevant regulatory agencies.
For the past seven years, corporate folks have been running amok -- ultimately to the detriment of our entire financial system and to us ordinary investors, consumers, and taxpayers.
Anyone analyzing it logically should have instantly recognized that someone had to step in -- that we couldn't hope for a rescue from the same human beings who'd made horrendous investment decisions for the companies that paid them and who'd helped drive our nation's economy into a ditch.
Credit where it's due: kudos to the Bush Adminsitration for finally abandoning the so-called "free market" (read: "anti-accountability") talking points.
Memeorandum has commentary.
Other Buck Naked Politics Posts:
* Interbank Lending and Capitalization, Swedish Style
* Lehman Execs Re-Distributed Shareholder Wealth (to Themselves)
* AIG Execs Re-Distributed Shareholder Wealth (to Themselves)
* Execs Took Millions While Driving Companies into Ditch
* Fannie Mae CEO Got $38 Million, Risky Buys Weren't his Fault?
* AIG Spent $61 Billion of Bailout Money and Plans to...
* Wall Street to Say "No thank You" to Bailout Funds?
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