by Deb Cupples | We all knew there were problems with the Bush Administration's massive, corporate-bailout proposal before Congress even passed it. The tell-tale sign came in September, when a Treasury Department spokeswoman told Forbes that the $700 billion number was "not based on any
particular data point... We just wanted to choose a really large number."
At that moment, most Americans smelled a stench that rivaled week-old fish, left on a counter top in a South Florida house with a broken air conditioner. Congress passed and President Bush signed the bailout bill anyway.
Yes, we knew there would be major accountability problems, because our government officials failed (or refused) to put strings on the cash that Treasury would ultimately hand out to the same reckless executives who drove their companies into a ditch.
Now, Congress reportedly has a plan to salvage what shreds of accountability may still exit:
"The Congressional Oversight Panel, a four-person
board authorised by Congress and led by consumer advocate Elizabeth
Warren of Harvard Law School, is charged with finding out what Treasury
has done with the billions it has already spent.
"'We are here to ask the questions that we believe all
Americans have a right to ask: who got the money, what have they done
with it, how has it helped the country and how has it helped ordinary
people?' the panel says in its first report, which lays out its work.
"The panel has begun gathering documents from Treasury and also
is holding a series of public meetings across the U.S., to hear the
public's concerns about the bailout and the economy. The panel expects
to have some answers for Congress and the public by Jan. 9, when it
will issue a report on its website, cop.senate.gov." (International Press Services)
At least an investigation is some sort of start, but what would Congress do if (more likely, when) it learns that truckloads of tax dollars have simply been funneled into the personal pockets of Wall Street executives and employees?
Given that Congress drafted the bailout bill with few requirements in terms of how bailed-out companies could spend our tax dollars, what legal recourse would Congress have if it doesn't like how Wall Streeters have actually spent our money?
I smell a massive public-relations gesture -- though, I am curious about what the investigative panel will turn up.
"Oops, I was stupid," is less likely to get one kicked out of Congress or sent to jail than "Yeah, I meant to rip off the taxpayers."
Still, I suspect that the folks in Congress and the Bush Administration were neither stupid nor incompetent when drafting the virtually strings-free bailout bill.
Even I -- a lawyer who is not as savvy about federal legislative matters as federal staff lawyers are -- know this simple principle:
If you give a party money and don't require in writing that the party spend it in certain ways, then the party is not legally required to spend the money in certain ways.
Period. End of story. First-year law students understand this.
I submit that our House members, Senators and Bush Administration officials -- including Mr. Paulson -- also understand this principle. Even if they don't, some of their staff lawyers certainly do.
That leaves us with an important un-answered question: why did none of them insert a few sentences into the bailout legislation that required bailout fund recipients to spend at least some of our tax dollars on generating loans and unfreezing our credit markets -- which was the point of lending tax dollars to those companies?
The Polly-Anna answer would look like this: Oh, they just didn't have time -- it all happened so fast.
My response: within 10 days, the bailout plan went from a 3-page Treasury Department proposal to a 451-page bill, chock full of riders. The first House bill (which got voted down) was about 100 pages, if memory serves me.
In other words, some officials or staff lawyers were very busy adding thousands of sentences to the bailout bill before both houses of Congress passed it.
If the bill drafters had time to insert 300+ pages of stuff into the bill, then they certainly had time to insert a few sentences requiring companies that received bailout funds to spend some of that money on generating loans -- and within a specified time period, I might add.
And yet, such sensible sentences are conspicuously absent from the bailout bill -- as are sentences that would have ensured various forms of accountability.
With my mind-reading skills still in The Keys, dodging North Florida's cold front, I cannot tell you why government officials decided to exclude simple and sensible sentences from the bailout bill.
I am firmly convinced, however, that the failure or refusal to include those sentences did not stem from lack of knowledge or time.
Incidentally, the New York Times is keeping track of where some of the bailout funds have gone -- based on data that the Treasury Department has chosen not to keep secret.
It's understandable that so many Americans are thoroughly outraged. A Washington Post op-ed explains that outrage, using the Bernie Madoff example:
"...Bernie was one of all of us who refused to vote for politicians who would raise our taxes and make the nation live within its means, even as we went to war. Bernie was one of all of us who did not demand more diligent supervision of financial markets as long as the outsize returns kept flowing. And in his own special way, Bernie was one of all of us who wasted energy in myriad forms, kept on consuming imported goods even when it meant going into debt to foreign lands that do not wish us well, and cut budgets for regulatory and law enforcement agencies even in the fat years.
"So we got what we didn't pay for, too. And so will our children. They are awakening to this grossly unfair state of affairs."
Memeorandum has commentary.
Other Buck Naked Politics Posts
* Are Bailout funds Being Misused?
* Real Executive Bonuses Based on Fake Profits
* Cutting Executive Pay would Save Jobs
* Paulson's and Congress' Bailout "Mistakes"
* Lehman Execs Redistribute Shareholder Wealth (to Themselves)
* AIG Execs Redistribute Shareholder Wealth (to Themselves)
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