bailout

So, have you been wondering lately where all those taxpayer dollars involved in the Treasury’s brilliantly contrived “bailout” program are going? Lately, we – yes, us taxpayers – have been getting a few clues, and no thanks to officials at the Treasury who have written the actual checks. Press reports have shed some light on how companies are spending these “rescue” funds.

Interior decorating. Check.
Bad acquisitions. Check.
Exhorbitant executive bonuses. Check.
Lobbying. Uh, well, yeah…

The financial service sector contributed nearly $142 million to political campaigns, third-most among all industries, according to the Center for Responsive Politics’ OpenSecrets.org Web site (In case you’re wondering, 56% went to Democrats, 43% to Republicans); $131 million of this sum came from individuals. That’s about $130 million more than they would have contributed without bonus money. Apparently these lobbying expenditures last year have paid off. Clearly these financial companies have gotten what they paid for and much, much more.  Thanks a bunch Mr. Paulson.

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As reported in previous Global Investment Watch posts, the name Bernie Madoff has become synonymous with the word greed. One angle on the Madoff mess that is particularly distressing to us is that a number of organizations that we rely on for our research at JMR Portfolio Intelligence have been harmed. In the last few days I have received appeals from the Business & Human Rights Resource Centre and from Eli Pariser at MoveOn.org asking for money on behalf of the following organizations: The Brennan Center for Justice, Human Rights Watch, the Advancement Project, and the Center for Constitutional Rights. These organizations rely on support from foundations that trusted Madoff with managing their funds.

As far as bailouts go, I certainly don’t mind chipping in to help these organizations continue their good work, but what a sad scenario. It reminds me of the question asked in the brilliant 2001 animated film Waking Life: “Which is the most universal human characteristic: fear, or laziness?” I love the question, but I have often thought that greed should be one of the choices.

Here’s to a new year with a little less greed, fear and laziness. Cheers!

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Jim DeMint (S-SC), David Vitter (R-LA) and Mitch McConnell, along with a slew of other Republican senators have begun their pitched battle attacking American auto workers this week by opposing any bailout that doesn’t include slashing unionized autoworkers pay to that of non-union autoworkers in the south. Effectively killing a Congressional bailout of the Big Three automakers, they focused their invective on the high pay received by workers represented by the UAW.

Notwithstanding the question of whether the U.S. automakers should receive such help from Congress, attacking American workers as the root cause of the industry woes speaks volumes about what we already know about these Senators, who are hostile to the rights of working Americans while bedding with the worst elements of industry.

Extending the Senators’ logic a bit, should all American’s wages be reset to some other standard? Perhaps Congress should take it upon itself to set UPS worker wages to Fedex standards. Perhaps Toyota workers employed in Alabama receiving $40 an hour have their wages set to those workers at the VW assembly plant in Puebla, Mexico. The comparisons hare endless here but what is important is that, when it comes to screwing working people, these Republicans regulatory ambitions know no bounds.

On the other hand, if it is to become Congress’ role to regulate wages, then perhaps we can start to evaluate executive pay in a similar manner. Something modest is in order here. I like linking U.S. executives wages to that of similar executives in, say, Great Britain or France.

Breaking out of that fantasy, the reality here is that, as was noted in the LA Times and elsewhere, the Republicans’ primary aim is not to consider the merits of the financial bailout of the auto industry so much as to stick it to the UAW, sort of a counter punch to the upcoming effort by organized labor to enact the Employee Free Choice Act. In addition, any blow back that these Senators might receive from their fiscally conservative supporters (I’m speaking about their financial supporters not the electorate), is avoided by tossing this monkey wrench into the process. As we are seeing, President Bush is now talking about deferring funds from the financial industry bailout (TARP), allowing the Republican senators to spoil the deal while avoiding the consequences resulting from a catastrophic failure of the industry.

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During the past week, the media has railed about the performance by the CEOs from Chrysler, General Motors and Ford.  Like beggars in mink coats, Mssrs. Wagoner, Nardelli and Mulally marched to Washington DC last week to plead for $25 billion in financial aid from the government to an incredulous audience.  Ill prepared for the onslaught by Congressional inquisitors, the Big Three CEOs looked like angry zebras ready to face down a brood of lions. What was obvious to everybody but the “zebras” was the fact that that the even angrier public and Congress have lost patience for these business leaders who expect financial aid, no questions asked. Lions 1, Zebras 0. [click to continue...]

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Over the past few weeks, we’ve heard President Bush, Treasury Secretary Henry Paulson and various lawmakers declare that the root cause of the current financial crisis stems from illiquid assets related to mortgage-backed securities. But what does this really mean? And how can this “radioactive waste” be purged from the balance sheets of financial institutions holding these toxic securities.

John Sweeney, President of the AFL-CIO, responded to the original version of the bailout by describing it as “dangerous and ill-conceived.” Critics of the original proposal emphasize that the final plan must include limitations on executive pay and improved governance of public companies, taxpayer equity in distressed companies, independent Congressional oversight and a stimulus package designed to create more jobs.

Will the final $700 billion bailout plan resolve the fundamental cause of the crisis? What should the future relationship be between lawmakers in Washington DC and bankers on Wall Street? And how will the crisis impact the Presidential election? Dan Pedrotty, Director of the AFL-CIO’s Office of Investment, joins us to answer these questions and more.

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