This Tuesday, his first day on the job, Treasury Secretary Timothy F. Geithner issued new guidelines supposedly designed to curb the influence of lobbyists in determining who gets money from the Troubled Assets Relief Program (TARP). That’s right, I said curb, not eliminate. His rules call for “restricting contacts with lobbyists.” Why would any contact with lobbyists, looking to pick the taxpayers’ pockets, be necessary?
In any case, who will ensure the new transparency that Geithner promises? Why, the foxes themselves: “The Office of Financial Stability (OFS) will certify that each investment decision is based only on investment criteria and the facts of the case.” The OFS is the group within the Treasury that hands out the TARP money. It’s kind of like Madoff doing his own accounting and promising he won’t cheat.
If you are not laughing yet, consider the case of Barney Frank and OneUnited Bank. Politicians are not considered lobbyists, and there is no chance that Congress will prevent lobbyists from lobbying members of Congress who, in turn, will influence the decisions of regulators.
In October 2008, OneUnited Bank agreed to a cease-and-desist order issued by its Massachusetts regulators and the Federal Deposit Insurance Corp. According to CnnMoney: “The allegations against the bank included ‘operating without effective underwriting standards and practices,’ ‘operating without an effective loan documentation program’ and ‘engaging in speculative investment practices’.”
The FDIC complaint also alleged excessive executive compensation. Apparently, the bank was using bank funds to pay for a 2008 Porsche sport-utility vehicle for OneUnited CEO, Kevin Cohee, as well as making payments for a beachfront house in Santa Monica that, “according to the Boston Business Journal, was purchased for more than $6 million in early 2007 by a group that included Cohee and his wife Teri Williams, the bank’s president.”
In these troubled times, one would imagine that OneUnited would have difficulty surviving. But last week, the Boston Herald revealed that last fall Congressman Barney Frank—the powerful chairman of House Financial Services Committee—“inserted into the government’s $700 billion Troubled Assets Relief Program (TARP) bill specific language to help OneUnited.” The result was a $12 million TARP bailout for OneUnited.
Frank defended his meddling by claiming he only did do because it would be a very big mistake to put the only black owned bank in Massachusetts out of business.
So, let’s get this straight—one of the Congressional architects of the Emergency Economic Stabilization Act of 2008 (aka the bailout bill) believes we should subsidize businesses even when they act in ways that invite cease-and-desist orders. In his amazing arrogance, Barney Frank expects the taxpayer to just trust his judgment on how our money should be spent.
I wonder if Marvin Schur of Michigan trusted Frank—probably he was too busy trying to survive; probably he never even considered the issue. On January 17, at the age of 93, he was found frozen to death in his house. The power was restricted because he couldn’t pay his bills and the indoor temperature was below freezing. He died a horrible death. Presumably he worked until his retirement and paid taxes.
What does this have to do with Barney Frank? Perhaps nothing, but the $12 million that went to bailout of OneUnited and the overall $700 billion in bailouts that Frank championed had to come from somewhere. That money comes from taxpayers like you and me and Mr. Schur. The more money the government grabs, the less money taxpayers have to give to charities that provide fuel relief funds, and the less money private investors have to invest in alternative energy sources that make energy more affordable.
Yes, our actions have consequences—even if we can’t trace through direct cause and effect. My wife often reminds me that when you throw a stone into a pond, you can’t trace all the ripples.
Since last November, when Frank was reelected with 70% of the vote and Cohee and Williams retained their jobs, millions have been laid off and others have gone without needed energy or food. Oh, and let’s not forget—although we are told it doesn’t matter—our new Treasury Secretary, Timothy Geithner is a tax evader and probable perjurer. Perjurer? Who really believes Geithner’s explanation of why he didn’t pay his payroll taxes, all the while he was being reimbursed for them, during his stint at the International Monetary Fund (IMF)? James Fallows writing in the Atlantic puts it clearly:
… I do not believe, and will never believe, that his failure to pay his own self-employment tax while at the IMF was an “oversight” or a “mistake.” I have many many friends who have worked for this and similar organizations. I have myself over the years juggled the complexities of what is self-employment income and what is W-2 income and how to handle income from non-US sources — and I have a lot less financial acumen than any Treasury Secretary aspirant should and must have. (Though I also use Turbo Tax!) Not a single person I have known from the IMF or similar bodies, not a one, believes that Geithner could have “overlooked” his need to pay US self-employment tax. When I have received similar income from international sources, the need was obvious even to me – and I wasn’t receiving and signing all the forms to the same effect Geithner would have gotten from the IMF. I could go on with details but I’ll just say: if this were a situation more average Americans had experienced personally, he would not dare make his “mistake” excuse because everyone would say, “Are you kidding me???”
Today President Obama said it was “shameful” that Wall Street and the banking industry paid themselves more than $18 billion in bonuses last year. Who could disagree? But let’s make no mistake, these bonuses were not enabled by the excesses of free-markets, as many would lead us to believe. These bonuses were enabled by the likes of Geithner and Frank and the taxpayer monies that they used to bailout Wall Street. The free-market provides swift justice to the excesses of John Thain and Merrill Lynch and other reckless firms—it is called bankruptcy with no bonuses. Despite Obama playing the bad cop today, Geithner and Frank will be the good cops on duty tomorrow, providing more of the same—goodies for the incompetent and a growing price tag for working men and women.
Forgive me if I am more than skeptical of “watchdogs” like Geithner and Frank. I have no trust in either their competence or their intentions. Trust is earned; it is not bestowed by title or position. No one who pays taxes has any reason to trust either of these men. Before this is all over, they will help waste trillions of dollars of taxpayer’s money while enriching their so called “too big to fail” cronies in the financial industry and other sectors of our economy.