WASHINGTON — Although hundreds of well-trained eyes are watching
over the $700 billion that Congress last year decided to spend bailing
out the nation's financial sector, it's still difficult to answer some
of the most basic questions about where the money went.
Neil Barofsky, the chief watchdog over the
$700 billion TARP bank bailout program, is one of those rare creatures
in Washington: he takes very seriously his responsibilities of
independent oversight and accountability. A career prosecutor,
Barofsky is a life-long Democrat who donated money to Obama's
presidential campaign.
In the banking panic of 1907, J. Pierpont Morgan personally organized a
syndicate of financiers to provide $25 million to collapsing banks. It
was this panic that finally persuaded Congress in 1913 to create the
Federal Reserve System -- not a single central bank but 12 regional
reserve banks and a weak board of governors in Washington. The New York
Federal Reserve Bank, with its intimate links to Wall Street, quickly
became the reserve system's most influential player.
Those who followed news coverage of the "tea party" protests last month will recall that one target of the partiers' ire was the TARP bailout of the banking system -- a policy of the Bush administration that President Obama has carried on.
And yet, in a television interview last month, we find no less a representative of the late administration than former Vice President Dick Cheney endorsing the protesters' accusations with what is, for him, considerable enthusiasm. "I thought the tea parties were great," he told Fox News's Sean Hannity.
To my knowledge, no one has proposed waterboarding the US Federal Reserve. But the hostile reaction of much of the country's political leadership to suggestions that the Government Accountability Office (GAO) audit the Federal Reserve Board might lead people to think that waterboarding was being called for.
The big dogs of banking and finance are playing a rough game of
bump-and-run with our president, trying to knock him off balance and
demonstrate their dominance. The best names in Wall Street--Goldman
Sachs, JPMorgan Chase--pumped out happy talk about quarterly earnings,
then announced that they intend to give back the government's money
(more than $50 billion, if counted honestly). The crisis, they announce,
is over for them. They want to be free of official meddling in their
private affairs. The arrogance is breathtaking, even for Wall Street
bankers.
We are being robbed big-time, but you
can't say we haven't been warned. Not after the release Tuesday of a
scathing report by the Treasury Department's special inspector general,
who charged that the aptly named Troubled Asset Relief Fund bailout
program is rife with mismanagement and potential for fraud. The IG's
office already has opened 20 criminal fraud investigations into the
$700 billion program, which is now well on its way to a $3 trillion
obligation, and the IG predicts many more are coming.
By any normal political standards, this week's Congressional agreement on an economic stimulus package was a great victory for President Obama. He got more or less what he asked for: almost $800 billion to rescue the economy, with most of the money allocated to spending rather than tax cuts. Break out the Champagne!
WASHINGTON - The nation's largest banks, battling an image of jet-setting executives with multimillion-dollar salaries, will face tough scrutiny Wednesday from lawmakers who are struggling to understand the financial health of the institutions and the impact of a $700 billion taxpayer bailout.
Eight chief executive officers, including Bank of America's Ken Lewis and Wells Fargo & Co.'s John Stumpf, are scheduled to testify at a hearing of the House Financial Services Committee.
Someday historians may look back at Tom Daschle's flameout
as a minor one-car (and chauffeur) accident. But that will depend on
whether or not it's followed by a multi-vehicle pileup that still could
come. Even as President Obama refreshingly took responsibility for having "screwed up," it's not clear that he fully understands the huge forces that hit his young administration last week.
