Editore"s Note
Tilting at Windmills

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March 24, 2009
By: Hilzoy


Via TPM, a Wall Street Journal article that says, basically, that at first the Obama administration did not particularly seek out Wall Street's advice:

"In late January, as Treasury Secretary Geithner prepared his proposal for handling the banking crisis, administration officials avoiding seeking input from Wall Street. "Those people are tainted," said one aide at the time. "Why would we consult the very executives who got us into this mess?" (...)

The administration's initial approach contrasted with those of the last two White Houses. Robert Rubin left Goldman Sachs Group to become one of Bill Clinton's top economic advisers, and convinced the new president that what was good for Wall Street was good for America. Under President George W. Bush, the administration "looked up to and admired Wall Street," says one banker. "The Obama folks don't even like us.""

But then Obama decided that it was important to reach out more to Wall Street, and did. More Wall Street people were consulted; the administration worked harder to win them over.

Here are the passages from the article that really got to me. (Emphases added.) First:

"Meanwhile, Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday. (...) Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun "slow-walking" the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions."


"But as the furor intensified, Mr. Obama's words to Congress -- "we cannot govern out of anger" -- seemed to take on less importance. Last week, he was asked by reporters on the White House South Lawn whether anger was getting in the way of pushing through banking reforms. "I don't want to quell anger," he replied. "I think people are right to be angry. I'm angry."

Bankers were shell-shocked, especially when Congress moved to heavily tax bonuses. When administration officials began calling them to talk about the next phase of the bailout, the bankers turned the tables. They used the calls to lobby against the antibonus legislation, Wall Street executives say. Several big firms called Treasury and White House officials to urge a more reasonable approach, both sides say. The banks' message: If you want our help to get credit flowing again to consumers and businesses, stop the rush to penalize our bonuses."

I think it's important to be really, really clear about what this article claims. Both the stress tests and the attempts to get credit flowing again are essential parts of our attempt to solve the enormous economic problems we now face, problems that these very firms are largely responsible for. If the banks are "slow-walking" the stress tests and threatening not to help get credit flowing, that just is threatening not to help get the country out of the economic crisis.

That would be an absolutely appalling thing to do under any circumstances. It would be doubly appalling since these very people bear a lot of responsibility for that crisis. But the fact that they are making these threats not over some large issue of principle, but over their bonuses -- that's just breathtaking.

I'm with Ezra:

"Not to sound naive about this, but the absence of patriotism that galls. The lack of responsibility is sickening. These bankers delivered an almost mortal wound to the American economy. Their actions threw millions out of work and wrecked the retirement savings of tens of millions more. It is no exaggeration to say that they will cost us more than 9/11. (...)

That we even need a new raft of compensation regulations strains the boundaries of credulity. It makes you question the values of your countrymen. They were the principle beneficiaries of a decade-long bubble that they inflated. These Ivy League bundles of privilege were given every possible advantage and then took yet more than that. They took the advantages of high school seniors applying to college this year or entering the workforce next year. They took the advantages of seniors who had saved for retirement and parents who had invested to build their own business. And now they're refusing to help defuse the bomb at the center of our economy unless we pay them retention bonuses. Worse, they're threatening to flee the scene of the crime and make money off the carnage. That, it's been argued, is why we need to keep paying meeting their demands: Because we need them working for us rather than against us. It's chutzpah as the Yiddish define it: A child who kills his parents and then begs for lenience because he's a pitiable orphan. It's shameful."


Hilzoy 1:04 AM Permalink | Trackbacks | Comments (42)

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I keep hearing we need these greedy weasels to unwind the mess they made. Are there no others in this great nation that could do that. With every passing day, it seems these arrogant fools are making it impossible to not take the odious step of government taking over and managing the lions share of our financial system. Shameful indeed.

Posted by: Comrade Stuck on March 24, 2009 at 1:29 AM | PERMALINK

As if any further proof was necessary that these morons don't get it. They're still thinking about their earnings after steering their fleet of financial institutions clear onto the rocks of insolvency.

Not a thought about stepping up with solutions, or coming, with a small group of representatives, to say sorry for what we helped cause but here are some ideas of how we can help put this right.

Not hard to see why they should be so signally ungrateful after the taxpayer -- through Paulson and Geithner -- have opened the check book wide, bent over and said "thank you, and may I have another." They think it's owed to them.

It's getting way too late to take the gloves off. These "captains" of finance need to go. All of them. And it won't be a moment too soon.


Just remember that $6.8 billion has flowed through AIG to Merril Lynch over and above the direct help, and $12.9 billion to Goldman Sachs the same way while they try to pretend they are above the fray and sooo much better than everyone else. So MUCH B.S.

Posted by: notthere on March 24, 2009 at 1:37 AM | PERMALINK

Sorry, libs. We're in class war territory now.

The hedgies know the score; why don't you? Time to choose which side you're on.


Posted by: slaney black on March 24, 2009 at 1:44 AM | PERMALINK

As if any further proof was necessary that these morons don't get it.

Oh no, they get it. They own the country. Joke's on us.

It's getting way too late to take the gloves off. These "captains" of finance need to go. All of them. And it won't be a moment too soon.


Posted by: slaney black on March 24, 2009 at 1:46 AM | PERMALINK

I'm really glad that somebody finally got around to bringing up the patriotism aspect of this financial siutation.

(Thank You, Ezra Klein!)

Posted by: gizmo on March 24, 2009 at 1:53 AM | PERMALINK

Spencer Ackerman asks a very good question:

"What would we think, for example, if we discovered that the Bush Administration had been secretly lending hundreds of billions of taxpayer dollars to their friends to participate in a highly speculative investment scheme? And some of the friends turned out to be former colleagues and mentors at private equity and sovereign wealth funds, and most of the money came from subsidized interest rates on non-recourse loans from the FDIC, so that if the investments went bad, the private investors could walk away with only minor losses while leaving the Treasury stuck with the bad investments? But if the investments became profitable, the private investors would have leveraged massive US dollars and become obscenely rich."


Posted by: walden pond on March 24, 2009 at 1:54 AM | PERMALINK

Yeah, they're a--holes. We all knew that ever since Gordon Gecko and "greed is good" in the 80s.

But if they say they can get hedge funds and private equity to bail them out of this mess, I say let's call their bluff.

Say, OK, you've got two months to get the equity raised and pay back Uncle Sam, and if you can't, you're not only not getting your BONUSES, but we're going to nationalize your banks and your SALARIES are going to be regulated, too. Go ahead and quit and see just how many of you can find jobs with hedge funds or private equity firms.

Well, punks, do you feel lucky?

Posted by: Harry Callahan on March 24, 2009 at 1:55 AM | PERMALINK

Moving aside the people who caused the crisis is a fundamental part of recovery. As long as we don't do it, we're not fixing the problem.

Posted by: Rachel Q on March 24, 2009 at 1:57 AM | PERMALINK

Gang of Galts. How Randian !

Posted by: M.B. on March 24, 2009 at 1:57 AM | PERMALINK

Not to burst anyone's bubble, but this is how you get things done IN THE REAL WORLD. We need Wall Street just as much as they need us. Obama has no choice but to work with them. And because he's a pragmatic politician and not a liberal ideologue, he's going to do that.

Posted by: Texas Dem on March 24, 2009 at 2:08 AM | PERMALINK

The naivete shown by this White House is appalling, you can't start attacking people and then ask for them to help you out, why should they?

Posted by: dualdiagnosis on March 24, 2009 at 3:25 AM | PERMALINK

The naivete shown by this White House is appalling, you can't start attacking people and then ask for them to help you out, why should they?

Please, oh, please, Mr Wall St, we're PRAYING you don't help. Just start wrecking everything, breaking everything, burning everything. You have teh POWER! You be teh MASTERS!

I'm sure the Congress will just watch you do it. Or maybe the next law Congess passes will make the Congress-is-pissed bonus law look like a small fart in a strong wind.

Posted by: Huh? on March 24, 2009 at 5:00 AM | PERMALINK

Not to sound naive about this, but the absence of patriotism that galls. - Ezra

Sounds pretty naive to me. Was Bernie Madoff's problem patriotism? Will Karl Rove and Alberto Gonzales cooperate? Does Obama pal around with terrorists? How have we gone from "Just the facts, ma'am" to caring more about how the accused feel about what they're accused of.

By the way, the reason I throw in the Obama example is because if you had to use a more substantive verb clause like "plan attacks", "use education for propaganda purposes" or "recruit extremist activists", you would have a tough time sustaining the argument.

Yesterday, Ed Schultz made the argument that there isn't enough patriotism on Wall Street for people to accept positions in Obama's Treasury department due to the vetting process or the pay. IMO that's a fair argument, but only because they are not accused of anything specific other than greed. By contrast the these bankers are accused of improper accounting. "Slow walking" shouldn't be a question of voluntary cooperation, and compensation should not in any way be related to this discussion.

Posted by: Danp on March 24, 2009 at 5:09 AM | PERMALINK

It is no exaggeration to say that they will cost us more than 9/11.

Terrorists: We fought them over their, so we could enrich them over here.

Pass it on.

And while we're on the subject, my personal opinion is that at least a few of these bubble-masters, whose greed should at the very least be deemed to constitute an act of war, ought to be put up against the wall....

Posted by: Steve W. on March 24, 2009 at 5:16 AM | PERMALINK

Take this information along with the reports that "Atlas Shrugged" sales are way up as a sign that asking wall street to be patriotic is the wrong thing. People on Wall Street, and in the banking business have one purpose, to make money for themselves, not to rescue the country. It is Government's job to take care of the country.

Separation of functions is a good thing. What do you imagine is going to happen if wall street were given the job of saving the country? Any doubt that the beneficiary would be wall street?
We have outsourced enough of the government - it is time to take back the functions that we have given away.

The government abrogated its responsibility by not keeping watch over the misdeeds of wall street - we need to make sure that is fixed.

Posted by: Marc on March 24, 2009 at 5:39 AM | PERMALINK

I have to admit, I am more than a little surprise at the attitudes I see on Wall St. Not that I don't understand that they have been living extremely well, but that's not exactly real power. They keep claiming they are smart, but they don't seem to have thought this out very well.

1) Wall St. cannot fix the problem they have made or else they would not be asking for government help. So they cannot, all by themselves , make things better.

2) They can threaten to "make things worst" if we don't "cooperate" on a fix that favors them. They do have access to tons o money, and will use this to move any fix in their favor.

It's not like Wall St has nuclear weapons or anything. If, if, they "made things worst", they would loose the support of the power structure that protects them: the government (who need their campaign donations) and even to some degree the MSM (who are their well paid shills). All they would do is have 99% of the world's citizens coming after them with the full force and authority of every civilized nation on earth. I don't care how rich you are. There would be no place to hide.

The Wall St titans are in a very precarious situation. They can threaten to "make things worst", and it would certainly be a problem, but it would be the end of them. They have to walk a fine line trying to weasel the best possible deal out of this, but they cannot push so hard that even the MSM and Congress will dump them. They were probably somewhat shocked at how quickly Congress reacted to the public's outrage.

Obama too is in a tough situation. He wants things to return to normal for the good of the nation, but would be forced to act if the Wall St titan "make things worse". His comment to Jay Leno that Wall St was behaving like a suicide bomber that needed to be "talked down" was interesting. If we see Obama starting to move the general public out of the Wall St bomber's blast raduis, well, things may not end well.

Posted by: Glen on March 24, 2009 at 5:57 AM | PERMALINK

Bankers to America: Drop Dead.

Posted by: low-tech cyclist on March 24, 2009 at 6:08 AM | PERMALINK

Extortion? Economic Terrorism? No matter what you call it it should be more than appalling - it should be criminal.

Posted by: Bob on March 24, 2009 at 6:13 AM | PERMALINK

Not to burst anyone's bubble, but this is how you get things done IN THE REAL WORLD. We need Wall Street just as much as they need us. Obama has no choice but to work with them. And because he's a pragmatic politician and not a liberal ideologue, he's going to do that.

So he and Geithner keep coming up with variations on the same unworkable plan.

When "pragmatism" doesn't work, it's got nothing.

Posted by: low-tech cyclist on March 24, 2009 at 6:16 AM | PERMALINK

It makes you question the values of your countrymen.

They're better Americans than you or I.

Back in the '80's, when there was a raft of espionage scandals, I sometimes heard the argument made, 'Well, they did it for the money. They were just mercenaries -- they weren't ideological traitors'.

But they were ideologically motivated.

In a capitalist country, in a nation dedicated to the proposition that there are no societies, only markets, being a mercenary is an ideological statement.

We should give these banskters all medals.

Posted by: Davis X. Machina on March 24, 2009 at 6:54 AM | PERMALINK

Start the prosecutions. That'll shut the bankers up.

Posted by: Jay on March 24, 2009 at 7:35 AM | PERMALINK

As some blogger said, it's like a bank robber wanting a finding fee to tell us where the loot is buried.

Posted by: anandine on March 24, 2009 at 7:39 AM | PERMALINK

T'was ever thus:
"Dollars! All their cares, hopes, joys, affections, virtues, and associations seemed to be melted down into dollars. Whatever the chance contributions that fell into the slow cauldron of their talk, they made the gruel thick and slab with dollars. Men were weighed by their dollars, measures were gauged by their dollars; life was auctioneered, appraised, put up, and knocked down for its dollars. The next respectable thing to dollars was any venture having their attainment for its end. The more of that worthless ballast, honour and fair-dealing, which any man cast overboard from the ship of his Good Nature and Good Intent, the more ample stowage-room he had for dollars. Make commerce one huge lie and mighty theft. Deface the banner of the nation for an idle rag; pollute it star by star; and cut out stripe by stripe as from the arm of a degraded soldier. Do anything for dollars! What is a flag to them!"

(Charles Dickens (1812-1870), British novelist. Martin Chuzzlewit, ch. 16 (1844). Remarking on a company of New Yorkers.)

Posted by: MR Bill on March 24, 2009 at 7:46 AM | PERMALINK

Asset forfeiture laws basically give the police the right to steal.

Why don't we just let the cops loot these guys' houses?

Posted by: alan on March 24, 2009 at 8:18 AM | PERMALINK

yep, indict a couple guys, you get immunity if you cooperate fully with the Treasury. otherwise know that you are next. and unless you are really, really, REALLY stinking rich, the government can break you in an investigation and trial, it can easily cost ten million to defend a securities prosecution effectively, and even that doesn't always work, does it Martha Stewart? It's time to have a quiet conversation with these jackasses (and anyone who uses a call from SecTreas about a bailout to complain about his bonus is a jackass) and explain their three options: retire, cooperate fully or have a nice chat with Patrick Fitzgerald's new White Collar Crime task force.

Posted by: northzax on March 24, 2009 at 8:19 AM | PERMALINK

oh, and isn't this the Wall Street Journal, basically calling out bankers for being greedy? that's gotta hurt.

Posted by: northzax on March 24, 2009 at 8:23 AM | PERMALINK

1) Settle down the economy. 2)Re-regulate. Vigorously. 3) Prosecute with gusto.

Posted by: wb on March 24, 2009 at 8:56 AM | PERMALINK

Glen at 5:57 IMO those are some mighty salient thoughts for that fucking early in the morning. I am barely into my first cup of coffee by that time.

Note to the commentariat - People are free to comment as they choose, but the comments section on this blog leaves much to be desired. I visit Steve's blog because I he is a ready wealth of information. Hilzoy also provides thoughtful commentary. Unlike our hosts, who seem to have a sense of the complexity of the real world, the simplistic view of reality represented in the comments section is really hampering the excellent forum this place could be. Frankly, I miss the old carpetbagger days. (And, yes, I do believe in a single reality not a myriad of parallel universes that make dialogue impossible.) In addition, and I don't know why this is, we commentors rarely "talk" to each other. We are a bunch of one liners, with no internal dialogue. Part of the problem might be the lack of substance to the comments. Its fine to have an opinion, but even a madman can have an opinion.

If we are talking banking, finance, could we please hear more from the reality based community, and less from the bomb throwers. I'd like to see the comments section less resemble politico and more swampland or eschaton. At least eschaton makes me laugh out loud.

We need to do a better job of organizing ourselves on this site. Card check anyone?

Posted by: Scott F. on March 24, 2009 at 9:05 AM | PERMALINK

I couldn't agree with you more Scott buts let's start with the silly outrage expressed by Hilzoy. By her thinking we should just hang all the bankers and have the garbage collectors run the banks.

Posted by: Gandalf on March 24, 2009 at 9:48 AM | PERMALINK

This would not be the first time in our history that liberals have had to rescue capitalism from the capitalists. Just as FDR did before him, Obama has had to remind our Masters of the Universe that they are not a permanent privileged class or hereditary aristocrasy, nor do they rule by Divine Right. They are a collection of fortunate rich people who make their living in a democratic republic whose rulers -- its citizens -- tolerate their oversized riches and the system that creates it because it confers benefits on everyone else. That's the social theory -- or myth -- upon which American democratic capitlism rests.

So, whenever the benefits that accrue to the super-rich become disconnected from the concrete contributions they make to the larger society -- as it has in the AIG controversy -- then the entire rationale upon which capitalist disparities of wealth rests threatens to collapse.

Obama and his team understand, even if Wall Street does not, that we are a democracy first (with a preference for equality at its core) and only secondarily a free market capitalist system. The class of aristocrats who lost their heads in the French Revolution deluded themselves that their superior place in society was assured by Nature and Nature's God. America's economic aristocracy has always had to justify its position according to more utilitarian considerations. As Obama and his team are well aware, that the jury on this is still out.

Posted by: Ted Frier on March 24, 2009 at 10:06 AM | PERMALINK

Gandalf, Gandalf....I remember now -- in the Common Tongue of Men and Hobbits, the name signifies 'he who slays straw men', while the rarely-heard Elvish version of the name means 'peddler of talking points'.

Posted by: Davis X. Machina on March 24, 2009 at 10:48 AM | PERMALINK

Gandalf, spent too much time trying to read econ 101 posts on the Geithner plan, and too little time sleeping.

Was just commenting on the obvious:
1) Wall St needs us to make things better.
2) We need Wall St to NOT make things worse.
3) If Wall St actually makes things worse, we no longer need them.
4) And public outrage would be very broad and very hard to stop.

Posted by: Glen on March 24, 2009 at 10:56 AM | PERMALINK

"If the banks are "slow-walking" the stress tests and threatening not to help get credit flowing, that just is threatening not to help get the country out of the economic crisis."

Let me set aside the slow-walking, although I will point out that having those numbers double-, triple-, and quadruple-checked will be very important if, down the road, Barney Frank and Andrew Cuomo get involved.

As to the "threatening" component identified in this tirade - I think the relevant divide is between two views of the banking business.

If you think that most of the bank employees who get total comp over $250,000 were involved in home mortgages and their securitization, then I guess it makes sense to want to deny them pay now. It may not be productive, but there is at least some concept of action and consequence in play.

On the other hand, if you think that most of those employees were no more involved in mortgages and breaking the bank than Hilzoy or Ezra, you may also think that the bank execs talking to Congress are simply identifying a problem rather than making a threat.

For example, Citigroup historically makes a lot of money trading foreign currencies. Is the taxpayer better off if the star FX traders quit and go to a hedge fund? I don't think it is crazy to think that maybe we want them working at Citi (I could go either way - maybe we really should completely restructure the banking business and exit all sorts of businesses, profitable or not.)

Well. If the head of Citi, who has already given up his bonus, says he is going to lose his FX team over this compensation issue, is that a threat? Do those people really have a patriotic duty to work at Citi for substantially less than they could earn elsewhere as penance for sins they did not commit (sorry for the cryptic religious reference...).

And if a profitable money manager says he can't even think about joining this new Treasury toxic waste program without some assurance that, if his trades are profitable, Barney Frank and Andrew Cuomo won't identify his employees and subject them to a retroactive tax, well, is that unreasonable? Is it really the patriotic duty of someone not involved with the mortgage mess before now to work under the threat of ranting Congressman and punitive taxes because the public is mad at someone else?

As I said, it depends on how one understands the banking business and the varied roles of the many people who work there. I know that's a lot of reality for the reality-based to process, but a few facts might influence the debate.

Posted by: Tom Maguire on March 24, 2009 at 11:11 AM | PERMALINK

Business is business.

Posted by: JesusCrispy on March 24, 2009 at 11:26 AM | PERMALINK

Their actions threw millions out of work and wrecked the retirement savings of tens of millions more. It is no exaggeration to say that they will cost us more than 9/11. (...)

Three comments in one:
Comment 1) I totally agree that the bankers are contemptible and worthy of tarring, feathering, ridiculing and imprisoning for what they have done to the US economy. I mean, my pitchfork, my torch and my crazy mob voice are all set to go, but I am still uncomfortable with this kind of statement. Is it overly nice to resist making comparisons between genuine economic hardship and the suffering caused by a death toll that is higher than 8,000 people and counting? (9/11 plus f**king Iraq invasion & occupation.)

Comment 2) MR Bill wins the award for most awesome literary quote in a comments thread ever!

Comment 3) Scott F--Your standard must be very high! I think the comments on WM are still well worth reading though commentators may "talk" to each other less than they used to. Don't know why that is.

In addition, our host's thought-provoking insights and their "sense of the complexity of the real world" results in posts in which everything that needs to be said has been said, so well and so articulately that all we poor commentators can say in response is "yah, you betcha" in a variety of different ways.

Back in the day, Kevin Drum was brilliant at framing questions that provoked lively discussions. He was always wonderfully good-humored about setting himself up as the commentator's bobo doll. There were always many, many things we could say to improve on Kevin Drum's observations (perhaps this is why he moved to MJ and that awful, comments-suppressing interface.) With Hilzoy and Steve Benen, not so much.

Also, imho, I find many posts LOL, coffee-on-my-keyboard funny. I am in awe of people who can be so clever. So here we have a simple difference of opinion.

Posted by: PTate in MN on March 24, 2009 at 11:39 AM | PERMALINK

We need a special prosecutor - now - to investigate this and see if there are criminal sanctions that can be brought against these bastards.

Enough is enough.

Posted by: Juanita de Talmas on March 24, 2009 at 11:59 AM | PERMALINK

seriously, isn't a massive company refusing to provide information to the Congress and the administration a crime?

WHY has NO ONE been arrested for any of these crimes yet?!? is this going to be like Karl Rove simply refusing to appear, and the Congress refusing to haul him in?

Posted by: onceler on March 24, 2009 at 12:00 PM | PERMALINK

Also, did you know that "gullible" isn't in the dictionary? It's true! Check it out.

Who do you think this "one aide" works for? (Hint: think seasons.) How very convenient this "leak" is, eh? Oh, gosh, those Wall Streeters, we knew they were bad, but we were just trying to be reasonable, and look what they did! They made Obama cry! :(

Yeah right. And I'm Marie of Roumania. This is just someone trying to play pin the tail on the other donkey.

Posted by: tatere on March 24, 2009 at 12:55 PM | PERMALINK

You don't have to be an econ professor to smell which way the wind is blowing...

Must see!
Check out the Joseph Stiglitz interview over at TPM:


Listen with this quesiton in mind: Isn't this really all about making sure the wealthy people stay wealthy?

Posted by: koreyel on March 24, 2009 at 2:51 PM | PERMALINK

Are the problems we are facing in finance a result of changed lending laws from 1970 to present, that happen to be passed by congress and senate? If so did these changes create a "domino effect" in our finance market? Also, is it true that banks typically have a 5% lost more or less each year and that laws passed by congress and senate, require banks to carry subprime loans up to 20% (to companies and/or individuals who could not afford it, that is preditory lending), and that is the reason we are in this mess? Please advise...

One last thing, does it make sense to throw good money after bad, to the same people that caused the problem. It would seem that would cost double if it failed. If the finance companies "repackaged" loans and re-sold them,I wonder is that sort of like "bait and switch"?

Posted by: ineedcaffiene247 on March 24, 2009 at 5:13 PM | PERMALINK

As angering as this whole mess makes me, I tend to forget what BO reminded us on Leno. "It was all legal"
Don't get me wrong, I want to join with my pitchfork and angry mob voice, but we have to go WAY down the rabbit hole to prosecute the f'ers that legalized the deregulation in the first place...
*hint* They are all on the right side of the aisle, they talk a mean game too.
Every time we head to the polls, even for local elections, we have to remember where their allegiance is. Its never been to the little guy, ever!
As my wise dad once said 'I will never be rich enough to vote for a republican', 'they are the party of ME & the dems are the party of WE.'
My $.02

Posted by: vwmeggs on March 24, 2009 at 5:21 PM | PERMALINK

The 90% tax is beneath stupid.

(For one thing, what makes anyone think this tax lands on the people who did wrong? Huh? The assumption is staggering -- though the self-righteousness of it clearly is very enjoyable to some.)

So golly, why would banks and private investors not want to partner up with a Congress that is demonstrably:

1) Self-defeatingly beneath stupid; while

2) Breaking its prior overt promises to banks and private investors?

February: "We will honor all pre-existing contracts, that's the law!"

March: "Hey, you're getting money from these contracts we just promised to honor. And that money equals 8/10,000s of the cost of the bailout! The cost of the bailout itself doens't bother us, but that 8/10,000s is just too much! We're breaking these contracts to claw all that back!"

March: "We're offering you quite favorable terms giving you the chance to profit by investing in this Geithner plan bailout! We'll stick to them, we promise, it's the law"

???: "Hey, you're profiting disporportionately from these very favorable terms we gave you, and you're doing it at taxpayer expense!! You greedy bastards are getting too much, we're changing the terms to claw back..."

Sure, you'd all rush out to invest your own money partnering up with a partner that is proven by its own actions to be (1) beneath stupid, and (2) one that breaks it own promises with impunity at its partners' expense, for its own convenience.

And you'd do it out of "patriotism"! ;-)

Really, what would be worse about a piece of legislation -- that it violates as many principles of sound legislation and legislative responsibility as it can in as small a package as possible?

"Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation." -- James Madison, Federalist #44.

[Three-for-three there!]

Or that it is in a completely practical sense, very self-defeatingly totally stupid.

Posted by: Grinch on March 24, 2009 at 6:16 PM | PERMALINK



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