We are facing huge long-term problems: a real unemployment rate of 18%, dysfunctional banks that are "too big to fail", a regressive tax structure that's stifling economic growth, prisons that are bursting at the seams, urban schools that are struggling, a health care system that still needs major reform, the lack of a coherent national energy policy that will protect our economy and the environment, and a government that has been encroaching on our civil liberties. For decades we have lived with irresponsible public policies from career politicians in Congress who care more about increasing their party’s power and getting re-elected than they care about solving long-term problems. They haven’t been honest with us, and they have been lousy public servants.
I’m different. I do not want to be a career politician. I am not a Democrat or a Republican. I’m a Problem Solver. I want to force members of Congress to be responsible, and implement sustainable solutions to real problems. Please read the positions I present on this website, and spread the word to friends and family.
Thursday, August 20, 2009
I do not question the motives of most of the major players involved in creating TARP. Then Secretary of the Treasury Henry Paulson, Federal Reserve chairman Ben Bernanke, and essentially every member of Congress genuinely believed that we were facing a catastrophic economic meltdown that required massive federal intervention. I especially commend Mr. Bernanke for working extremely hard to do what he thought was best for us. I believe he is a patriotic, smart, honest, hard-working gentleman.
Having said this, I was very disappointed in the TARP legislation when I read what was finally passed in 2008. In late 2008 I publicly identified three failings:
1. The goal was to prevent a frozen economy that would spiral downward by providing hundreds of billions of dollars to corporations and banks to free up lending. However, TARP had no safeguards to ensure that the money would be used as intended! And if you read the "Controversies" section of the above wikipedia entry, we have since learned that very little of the money was actually used to increase lending:
"A review of investor presentations and conference calls by executives of some two dozen US-based banks by the New York Times found that 'few [banks] cited lending as a priority. An overwhelming majority saw the program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.' The article cited several bank chairmen as stating that they had no intention of changing their lending practices to 'accommodate the needs of the public sector' and that they viewed the money as available for strategic acquisitions in the future. Moreover, while TARP funds have been provided to bank holding companies, those holding companies have only used a fraction of such funds to recapitalize their bank subsidiaries. The Congressional Oversight Panel created to oversee the TARP concluded on January 9, 2009: 'In particular, the Panel sees no evidence that the U.S. Treasury has used TARP funds to support the housing market by avoiding preventable foreclosures'. The panel also concluded that 'Although half the money has not yet been received by the banks, hundreds of billions of dollars have been injected into the marketplace with no demonstrable effects on lending.'"
2. There was essentially no oversight of companies that received the money. While a "Congressional Oversight Panel" was created to oversee TARP, it had no power or influence on what the bailed-out companies could do with the money once they received it.
3. I was also upset that there were no provisions for preventing large compensation packages for executives of the bailed out companies who were largely responsible for getting us into this mess in the first place. Ironically, it was Chris Dodd who failed to stand firm and maintain the needed protection in the bill:
"Initially, Senator Chris Dodd was identified by Treasury Department spokesmen as being responsible for the inclusion of the provision exempting such bonuses from the executive pay limits clause of the TARP. However, on February 14, 2009, the Wall Street Journal published an article, Bankers Face Strict New Pay Cap, discussing a retroactive limit to bonus compensation inserted by Chris Dodd into the TARP bill that passed in the Senate. The same article went on to mention that Treasury Secretary Timothy Geithner and Lawrence Summers 'had called Sen. Dodd and asked him to reconsider'. When the bill left conference, Dodd's provison had been removed and replaced with the explicit exemptions lobbied for by Geithner and Summers. As Dodd explained in his March 18 interview on CNN, at Geithner and the Obama Administration's 'insistence' he removed the language he had himself inserted and replaced it with Geithner and Summers' loophole, which thus allowed the bonuses which formed the basis for the AIG scandal. Dodd retreated from his original statement that he did not know how the bill was changed. Dodd was criticised by many in the Connecticut media for the apparent flip-flop. In a March 20, 2009 editorial the New Haven Register called Dodd 'a lying weasel'. The same day, Hartford Courant columnist Rick Green called on Dodd not to seek re-election in 2010."
So, despite the best of intentions, this is a long, sad story of incompetence in crafting important legislation that we see far too often in Congress. It lead to the giveaway of billions and billions of dollars of taxpayers' money to greedy people who got us into this mess in the first place.
We need to elect people who define the problems, state clear goals, and implement responsible solutions for the people. I will fight tooth-and-nail to make Congress do this for all of us.