Unlike a few months ago when Bear Stearns needed a hand, the government was quick to point out it wasn’t a bailout. The government is no longer pretending it’s not in the bailout business. Treasury Secretary Henry Paulson made the rounds on the Sunday talk shows.
“I hate the fact that the taxpayer is going to be at risk, but the taxpayer was already at risk. And I think this is going to minimize the cost to the taxpayer, ” he said on Face the Nation, moments before host Bob Schieffer launched into an unusual commentary on the matter, pointing out that the bailout is more than the cost of the Iraq war.
“The Iraq war was expenditures,” Paulson said. “This is purchasing assets, holding assets, reselling assets, with money coming back into the Treasury. The taxpayer is clearly at risk, but … this, I think, will minimize the risk and the cost to the taxpayer.”
Assets? Like what? Office chairs? “From the desk of” memo pads from fired CEOs?
Debt. Bad debt. The debt nobody wants, pointed out Rep. Barney Frank, chair of the House Financial Services Committee. “It would be a grave mistake to say that we’re going to buy up the bad debt that resulted from the bad decisions of these [private sector] people and then allow them to get millions of dollars on the way out. The American people don’t want that to happen and it shouldn’t happen.”
Frank was on to something that is going to be a big issue over the next few months: Why is the government bailout of the institutions, and doing so little for the people trying to hold onto their homes?
BusinessWeek, in an article with questions and answers on the bailout plan, said Democrats want to “include measures that will lead to more help in refinancing or reworking homeowners’ mortgages, as well as a broader stimulus for the economy. This will be one of the biggest fights this coming week, as Treasury attempts to hold off those broader measures.”
And Congressional Republicans, too, have some changes to make in the administration’s plan, the New York Times reports. They want “specific protections for taxpayers. Those would include a requirement that any profits from the program be returned to the Treasury.”
This bailout is being described as “the mother of all bailouts.” There are some little children of bailouts out there, however. This week, in fact, the auto industry is asking the feds for $25 billion in loans.
So far, few politicians are saying these bailouts won’t happen in some form. That puts them at odds with most Americans, according to a new poll. Rasmussen says only 7 percent of those surveyed favored the bailouts. Even worse, almost half of those surveyed think an economic disaster approaching The Great Depression is possible.