Obama Financial Team to Taxpayers: You'll Get Nothing, and Like It

As a business person, Warren Buffet quite rightly wanted something for his money
when he bought up failed banks that couldn't get help anywhere else. In
fact, he wanted a lot. He expected to have the ability to make sure the
same crooks executives weren't pulling down the same
salaries for making the same mistakes, and that the business plan
changed. It was pretty basic, a bedrock principle of capitalism, the
ability to exercise control appropriate to one's share of ownership.

We're about to buy ourselves some failed banks, but we can't get what Warren Buffet gets because nobody wants to mention the "n" word, nationalization:

One part of that strategy will be
addressing the toxic assets that are clogging lenders' balance sheets
and preventing them from expanding credit, people familiar with the
matter said last week. Likely approaches include a government-run bad
bank to buy and hold some of the securities, and insurance of other
assets that remain on banks' books.

As Dean Baker says,
"many, if not most, of our banks are in fact bankrupt... the scope of
the toxic asset 'problem' has reached $2 trillion... this sum vastly
exceeds the capital of the banking system."

But our money somehow isn't as good as Warren Buffet's -- all we get for it is the "toxic assets":

[T]he Obama administration is looking
to hand taxpayer dollars to the banks through a variety of complex
mechanisms. The main reason for using complex mechanisms (rather than
simply seizing bankrupt institutions) seems to be to conceal the fact
that we are handing taxpayer dollars to bank shareholders and the
wealthy executives who run them.

calls it "lemon socialism": "taxpayers bear the cost if things go
wrong, but stockholders and executives get the benefits if things go
right." Or as Joseph Stiglitz says, it's "trash for cash."

It's almost inconceivable that anyone would try to sell this as a good deal for taxpayers, but that's where we are. Krugman:

"We have a financial system that is run
by private shareholders, managed by private institutions, and we'd like
to do our best to preserve that system," says Timothy Geithner, the
Treasury secretary - as he prepares to put taxpayers on the hook for
that system's immense losses.

Meanwhile, a Washington Post report based on administration sources
says that Mr. Geithner and Lawrence Summers, President Obama's top
economic adviser, "think governments make poor bank managers" - as
opposed, presumably, to the private-sector geniuses who managed to lose
more than a trillion dollars in the space of a few years.

And this prejudice in favor of private control, even when the
government is putting up all the money, seems to be warping the
administration's response to the financial crisis.

So Ronald Reagan tells us that government is the "problem," and
George Bush proves it's true by running the country into the ground.
What that really means is that you should never put people in charge of
something who philosophically don't believe that it's possible to do
their jobs well. It doesn't mean we should be making irrational
business deals out of a commitment to the failed ideologies of people
who, you know, failed.

We're paying to nationalize the banks all right, we just can't talk
about it -- nor can we profit from it -- because the very idea is
"socialist" and sits firmly within Jay Rosen's "sphere of deviance."

According to Rebecca Christie at Bloomberg,
they'll try to put a few band aids on the bill limiting executive "pay"
(not compensation) and dividends, and require banks to step-up lending.
But when Timothy Geitner appears
before the Senate Banking Committee on February 10, or the House
Financial Services Committee shortly thereafter, don't expect anyone to
be offering the Americans footing the bill for this deal anything other
than the unwanted detritus of the banks. Our representatives don't
think we deserve to get for our money what Warren Buffet gets for his.

If his banks make money, Warren Buffet makes money. He gets to be
richer and his shareholders get to be richer. If our banks get richer,
we don't get to have the schools and green energy and healthcare and
SUPERTRAINS that the profits could (and should) pay for -- that goes to
fois gras and Cristal and Gulf Stream jets for the bankers who created
this mess. We just get to keep a big pile of shit. Because suggesting
anything else is "deviant."

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