At least when it comes to the demand side, I’ve maintained that the lockup in our financial markets is cause by fear - fear generated by a lack on confidence in our leadership at all levels. When it comes to Washington in particular, we see the same politicians and hangers-on who gamed the mortgage industry and housing markets – and who undermined the world’s finances while doing it - now casting themselves as our saviors. They propose to ‘fix’ our problems, all the while railing against ‘corruption’.
The American people aren’t completely stupid and they know who got us into this mess. Is it any wonder that we’re now afraid that our saviors are going to make matters far worse? For fear is the very opposite of confidence – and confidence is what we assuredly lack. And there is nothing – repeat nothing – that’s happening in Washington to inspire confidence. Take the execrable Barney Frank, for instance. This is the same Barney Frank who protected Freddie and Fannie – and Franklin Raines – while they were burning down our financial house. From today’s Wall Street Journal:
Troubled OneUnited Bank in Boston didn’t look much like a candidate for aid from the Treasury Department’s bank bailout fund last fall.
The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives’ use.
Nonetheless, in December OneUnited got a $12 million injection from the Treasury’s Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.
Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.
Apparently, if you’re connected, you’re in the money:
A OneUnited lawyer, Robert Cooper, says he called Rep. Frank and Rep. Maxine Waters of California, both Democrats, to complain that the Treasury’s move had hurt the bank.
Rep. Waters heads the House Financial Services subcommittee on housing, and until last spring her husband, Sidney Williams, was a OneUnited director. Rep. Frank, besides heading the Financial Services Committee, has longstanding ties to OneUnited, and recalls having had a deposit account at a predecessor bank in the 1960s. . . .
On Oct. 27, the FDIC and Massachusetts bank regulatory officials, alleging poor lending practices and executive-compensation abuses by OneUnited, slapped it with a strong enforcement action, a cease-and-desist order. Among other things, the officials told the bank to get rid of a 2008 Porsche for executives. . . .
Mr. Frank — who has played a leading role in both the initial design of TARP and current planning to revamp it — says he spoke with a federal regulator and asked that OneUnited be given consideration for TARP money, “without in any way impinging on their general safety and soundness rules.” Mr. Frank said he didn’t remember which federal regulator he spoke with.
Read it all.
I’ve written about TARP before. The program has been justly criticized for its lack of transparency and systematic application and its political biases. In practice, it’s become a slush fund for the well-connected – administered by the politically powerful.
And these same people want trillions more. Do you feel confident yet?
Related posts:
Twitter
Facebook
RSS
LinkedIn