How's That Bailout Coming Along?

Last week Bloomberg News filed a lawsuit under the Freedom of Information Act to "force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks." This didn't come as a surprise to me as I've been reading BailoutSleuth.com for a few weeks and on 17 October, it featured a post called "The End of Bailout Transparency Already?" which showed documents relating to an agreement made public between the Treasury Department and Bank of New York Mellon Corp. to be full of redactions.



A few days later the site pointed out redactions in a contract between we the taxpayers and PricewaterhouseCoopers.



I am reminded of Cheney's little confab with the energy industry reps. How typical of this administration to do what it can to elude transparency.

The site also noted that a Wisconsin bank was trying to get its fair share of the bailout money: "Marshall & Ilsley Corp., based in Milwaukee, announced that it is getting as much as $1.7 billion in government funds." This despite the fact that the bank is "financially healthy". Instead it was "accepting the new capital as part of the government's broader effort to spur lending by removing doubts about the solvency of the banking sector." I thought the bailout effort was for banks in trouble but I'll put this down to my ignorance.

Today I read that Treasury Secretary Paulson is altering the bailout:

The government has abandoned the original centerpiece of its $700 billion rescue effort for the financial system and will not use the money to purchase troubled bank assets.

Treasury Secretary Henry Paulson said Wednesday that the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending. He also announced that the administration was looking at a major expansion of the program into the markets that provide support for credit card debt, auto loans and student loans.

Asked about what he had in mind to expand the rescue effort to support credit card and other types of consumer debt that is backed by selling securities, Paulson said it would probably take weeks to design the new program and then more time to get it implemented, a possible sign that any such proposal would have to be implemented by the incoming administration of President-elect Barack Obama.

After reading this last paragraph, I couldn't help but think of George W. Bush's great wisdom as he announced his War on Terror which would last generations: "…and I encourage you all to go shopping more."