Just go over to the Business section of the NY Times. It's like one giant free-for-all. My favorite headline? "Foreign Banks Hope Bailout Will Be Global." Don't worry folks, we're not just going to bail out the American companies - but the entire world's.
On Sunday, the Treasury secretary, Henry M. Paulson Jr., indicated in a series of appearances on morning talk shows that an original proposal introduced on Saturday had been widened. “It’s a distinction without a difference whether it’s a foreign or a U.S. one,” he said in an interview with Fox News.
The prospect of being locked out of the bailout set off alarm bells among chief executives of overseas banks whose American affiliates also hold distressed mortgage-related assets, like Barclays and UBS. The original text provided access to the $700 billion bailout for any financial institution based in the United States.
As the day wore on, some raised their concerns with the Treasury Department, arguing that foreign institutions were both big employers and major players in the American capital markets. By Saturday evening, the language had been changed to allow any financial institution “having significant operations” in the United States.
Brought to you by the guys who created the idea of tax breaks for shipping jobs overseas.
It's raining cash, no one wants to be left out - least of all the companies that took on bad debt that weren't even mortgages. Think we'd leave them behind? Think again. "Big Financiers Start Lobbying for Wider Aide," says the NY Times. It's ugly right from the article's lead:
Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.
So, what do we learn?
- "Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions."
- "The scope of the bailout grew over the weekend. As recently as Saturday morning, the Bush administration’s proposal called for Treasury to buy residential or commercial mortgages and related securities. By that evening, the proposal was broadened to give Treasury discretion to buy 'any other financial instrument.'"
- "The lobbying became particularly intense because Congress plans to approve a package within just two weeks, without the traditional hearings and committee process. "
My initial thought - that there's a rush to get the American taxpayers to make a rash decision before they have time to know better, and before an Obama administration can have its say - is right. This is a power grab, over a partially manufactured crisis. Surely, things are bad and they need federal help - but it's no coincidence that the lobbying has become "particularly intense." The sharks taste the blood in the water - and they want to eat all the food before it goes bad.
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