Bush & Dems give us a TARPit

Looked over the Emergency Economic Stabilization Act of 2008 a bit.  Title I – Troubled Assets Relief Program's SEC. 113 on page 39 is a key part. It specifies that if we buy assets (i.e. toxic waste) from financial firms we can either use a reverse auction (so the treasury will likely purchase these questionable assets at a low price, which isn't horrible.  Alternatively, we can get the assets for equity or senior debt (i.e. first in line if the firm goes belly up), which serves to help recapitalize troubled financial institutions.

The serious failure of this bill is that how much equity or senior debt we get is up to the Treasury Secretary.  What do you want to bet that Paulson, ex-Goldman Sachs CEO, isn't going
to insist on getting much equity for the money we pony up to Wall St?  Plus, (3) (A) allows the Treasury Secretary to exempt firms that have troubled assets of not more than $100 million.  I wonder how many subsidiaries these financial firms will create to get that exemption.

There are plenty of other problems with this bill.  Just on the face of it: the fact that it bails out Wall St. for their risky activity, saddles us with the debt and more than likely won't work.  These are the folks who keep thinking we turned the corner, after all.  But to top it off, there is no upside for the tax payer on this one.  Just a hope that Bush's folks act in the interest of the US people.  Just ask the people displaced by Katrina where that got them.

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