As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Friday, March 06, 2009

They Won't Have Us Follow The Money

The Politico writes a hit piece about Alan Grayson today (no link, they're trolling for one). They, and by proxy the Villagers and Republican concern trolls, are just horrified at his uncouth statements like calling Rush Limbaugh a "has-been hypocrite loser” who “was more lucid when he was a drug addict.” (I think Rush is a constituent, so good luck winning back his vote!)

What they're really mad about is that he hired a blogger, Matt Stoller, as his senior policy adviser, and he asked officials of the Federal Reserve what they're doing with nearly $2 trillion dollars of taxpayer money. This has become a feature of the financial meltdown - the utter lack of disclosure.

Banks like BofA will not disclose the timing of the bonuses Merrill Lynch handed out when they were on the verge of collapse, to the extent that people like Andrew Cuomo have to issue subpoenas to get some transparency. UBS will not disclose the names of thousands of Americans hiding their cash in Swiss bank accounts to dodge taxes, to the extent that Congress is attempting to rewrite the laws to crack down on offshore tax havens. AIG will not disclose the counterparties who are getting hundreds of billions of dollars in bailout money from the government, which is a major and evolving scandal that Josh Marshall and the TPM crew are trying to wrap their arms around. This in particular appears to be an unbelievable scheme, almost a black bag job, where the Fed drops money into an account and AIG picks it up so that everyone can maintain the fiction that it isn't a direct cash transfer. There's more here, including a description of how derivative counter-parties got away with murder in the 2005 bankruptcy bill, and how their taking all the equity if AIG went down would trigger a real and thoroughgoing collapse (as if one isn't imminent anyway).

But it's more than just AIG. The Fed won't release the names of any of the recipients of nearly $2 trillion in loans over the past two years. Bernie Sanders has legislation to force disclosure. CREW is filing a Freedom of Information Act request to find out. In fact, such requests have already been filed, by Bloomberg News and Fox News, only to be refused, despite being subject to FOIA.

As CREW explained in its request, the documents it seeks are essential to understanding and assessing the government's response to the devastating economic financial crisis our nation faces. CREW's Chief Counsel, Anne Weismann, put it like this:

Telling Americans that they are not entitled to know which banks are receiving 2.2 trillion dollars of taxpayer money is unacceptable under any terms. This administration has promised transparency and we expect it to deliver.

What is pretty clear is that a lot of this money is going to the banksters in backdoor bailouts that do nothing for the greater economy. Noriel Roubini writes:

“In the meantime, the massacre in financial markets and among financial firms is continuing. The debate on “bank nationalization” is borderline surreal, with the U.S. government having already committed–between guarantees, investment, recapitalization and liquidity provision–about $9 trillion of government financial resources to the financial system (and having already spent $2 trillion of this staggering $9 trillion figure).

Thus, the U.S. financial system is de facto nationalized, as the Federal Reserve has become the lender of first and only resort rather than the lender of last resort, and the U.S. Treasury is the spender and guarantor of first and only resort. The only issue is whether banks and financial institutions should also be nationalized de jure.

. . . AIG, which lost $62 billion in the fourth quarter and $99 billion in all of 2008 and is already 80% government-owned. With such staggering losses, it should be formally 100% government-owned. And now the Fed and Treasury commitments of public resources to the bailout of the shareholders and creditors of AIG have gone from $80 billion to $162 billion.

News and banks analysts’ reports suggested that Goldman Sachs got about $25 billion of the government bailout of AIG and that Merrill Lynch was the second largest benefactor of the government largesse. These are educated guesses, as the government is hiding the counter-party benefactors of the AIG bailout.”

The inability to disclose is intuitively linked to an inability to tell the truth - the banks are insolvent, the government already essentially owns them, and this inability to admit what's completely obvious is destined to cripple the economy permanently unless action is taken.

Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.

Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.

Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away [...]

So why has this zombie idea — it keeps being killed, but it keeps coming back — taken such a powerful grip? The answer, I fear, is that officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.

But this refusal to face the facts means, in practice, an absence of action. And I share the president’s fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

This is why the establishment is mad at Alan Grayson. He's willing to say this kind of thing out loud.

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