The Bottomless Bailout

It is relatively easy to announce hundreds of billions of dollars of corporate rescue programs here and hundreds of billions of dollars of guarantees of corporate recklessness there
and trillions of dollars of assorted stimulus, loan availabilities and
foreclosure prevention initiatives in all directions. Now comes the
rubber hitting the road.

Where are the skilled people to be hired by the federal agencies--the
administrators, field implementers, auditors, financial whizzes able to
understand the complexity of greed and over-reach; the inspectors,
prosecutors and contract negotiators to name a few categories?

In other words, how are a hurried President Obama and his deputies going to rapidly build up the infrastructure
of the federal government itself to advance all these "public works"
efficiently and to avoid expenditure disasters amidst a potential orgy
of waste, fraud and abuse by the coast to coast recipients?

So many of the federal government's functions have been contracted out
to corporations and consulting firms under Clinton and the Bushes that
there is a serious dearth of skilled civil servants. Moreover, Obama
has indicated he wants this work done by an accountable government and
not by Halliburton-type outside contractors at greater expense to
taxpayers.

Knowing and doing have to go hand in hand. Some
Congressional Committees have finally gotten around to asking the basic
questions about what is actually going on inside companies like the
giant financial conglomerate AIG. Since the Goliath's near collapse in
September, the federal government has committed $160 billion to keep it
from splattering its reckless red ink over small businesses,
municipalities, 401(k) plans, policyholders and of course the Fortune
500 big companies led by the omnipresent Goldman Sachs bank.

At a Senate hearing on March 5, 2009 to review yet another $30 billion
in rescue funds, Senators from both parties demanded that the Federal
Reserve make public the names of the parties benefiting from all this
taxpayer largesse. These include the derivatives trading partners (eg
credit default swappers) who have received tens of billions of these
dollars passing from Washington through AIG to them.

Senators Chris Dodd, Richard Shelby and Jim Bunning went after Donald
L. Kohn, the vice-chairman of the Fed board of governors who finally
promised he would ask the other governors to reconsider their corporate
privacy policy under these megabailouts. Don't hold your breath!

Surprisingly, the Wall Street Journal editorial writers weighed in
three days earlier about this fourth ever-sweeter rescue of AIG. in six
months. In an editorial titled "AIG's Black Box" the Journal thundered:
"Perhaps someday the feds will even explain to taxpayers which AIG
creditors had to be rescued and why.....try figuring out exactly who
benefits when taxpayer money arrives at the insurance giant."

Besides rebuilding the federal workforce and finding out what is going
on inside casino capitalism begging for bailouts, the Obama
Administration is wading into an administrative nightmare that could
run through trillions of mis-directed dollars and not turn around a
deep Recession plunging toward Depression.

When dealing with esoteric gambling chips called "derivatives" that are
bets on bets on debts on debts, more than astute regulations and
prosecutions are needed to punish, disgorge and deter present and
future self-paid corporate crooks looting and draining other people's
pensions and savings. What is essential is that the federal surgeons
have to know just where to apply their scalpel on the continuum
spanning the big predators to the millions of direct and indirect
victims.

So, during the next Congressional hearings featuring government
witnesses from the Federal Reserve, the Treasury Department and the
securities, insurance and banking regulatory agencies, the Senators
should start with four direct questions:

1. Just what is it that you do NOT understand about what is going on inside this widening Wall Street mess?
2. Why don't you understand what you need to know?
3. How are you going to use your powers to achieve such understanding?
4. Finally, if these corporations like AIG are too big to fail, too
secret to fail and overwhelmingly global in structure and operations,
why aren't you asking other governments to pitch in with their own
rescue packages and tell you what they know?

As one solid small town banker in Indiana put it recently: "If these big companies are too big to fail, then they're too big."