I saw the President’s speech last night. Sounded a lot like he said, “The sky is falling!” This morning, I saw Senator McCain say he came back to Washington because this is a situation for “all hands on deck.” Soon as I heard that, I switched from CNN to C-Span to see what “all hands on deck” looks like. What I saw was a Representative in a nearly empty chamber, discussing the pardon of some guy who was wrongfully convicted due to race, followed by later a discussion of forests in the Pacific west. Maybe it’s just me, but it didn’t look like there were any emergencies happening. Unfortunately, I don’t get the other C-Span channels thanks to local county politics giving Comcast a monopoly here.
Here is what I think about the bail out. First it is a bail out not a rescue. No one is dying here, some companies who made bad choices or were defrauded may be nearly out of business. That’s a shame, but it’s not the government’s job to save businesses. Granted, it looks like it’s not just a few businesses, but a large number of banks, kind of like the savings and loan crisis of the 80’s. So if we don’t bail them out, I might not be able to get my $300 out of my bank without seeing the FDIC in action first. And I don’t want to see that.
I have known since I first heard about the bail out that it was a done deal. The delay was a dog and pony show to make it seem like our leaders where thinking about it carefully. Now I’m not really that cynical, I do think a lot of them were thinking about it carefully. I also think it’s likely that without a bail out, there would be a run on the banks; a la Black Tuesday. I think that is where careful thought has lead most of our leadership.
Here is what I don’t like about the bail out: unanswered questions. I just heard the House Financial Services Committee all but say they had reached an agreement, an agreement that includes “Congressional oversight.” What I want to know is: what exactly does that mean? There was already oversight built into banking and still, here we are. Tell me how this new oversight is different.
Who will be getting this $700 billion dollars? And I mean specifically who. I want a list. I want to know how much each of the firms on the list will get. I want to know what it takes to get on the list. My business has been struggling over the past year, how do I get help? Actually, that last question is rhetorical, I already know the answer is “you don’t.” But I do want the applications for bail out to be public, I’d love to see CNN shine a nice bright spotlight on this list, but I don’t think I’ll hold my breath. In fact, I expect the Bush administration to say that it’s confidential, assuming someone asks.
Which banking institutions won’t be getting this help? I’m sure that seems like an odd question, but here is the reasoning: I would like to know that I put my money in a bank that was making the best decisions, especially while the bubble is bursting.
I think it’s odd that since the start of the talk about the bail out, I haven’t heard the words Sarbanes or Oxley on any news show. Wasn’t the point of SOX to keep large, publicly traded, companies from suddenly evaporating due to accounting errors and fraud like Enron did? If so, why did SOX fail so badly that we are now apparently faced with the possible sudden evaporation of most of our largest banks and investment firms? Where in the financial reporting of these companies is the indication of potential problems so large as to require a $700 billion shot in the arm? And again, how will this new oversight be more effective?
Most importantly, I want to see the auditing that was done in the last few years of all the companies that will be receiving this money. Either of two possibilities exist here: there was a huge event that could not be foreseen that knocked our banking system so badly as to need help, or there was a massive pervasive fraud that caused this. I suspect the latter is the most likely explanation. And if so, I want to know who and I want to see the people responsible spend some time in club fed. And the C*O’s of these companies should either be in club fed or never allowed to manage at the C*O level ever again by law. A look into the auditing here will be required.
If these questions don’t get answered, then what is happening here is a redistribution of wealth in the fashion of Ferdinand Marcos.
With all this going on, CNN showed a snippet of Katie Couric’s interview of Governor Palin where Couric pressed the question about how being next to Russia was foreign policy experience. I’ve never thought much of Couric, so it’s funny to see her with an expression of pity as she watched Palin falter on the answer.