The $700 Billion Bailout Plan's Fine Print

[babsbunny]

http://www.truthout.org/092308A

Wednesday 24 September 2008

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by: Nomi Prins, Mother Jones

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Treasury Secretary Henry Paulson's $700 billion bailout plan includes a section that puts taxpayers on the hook for future bailouts. (Photo: Chip Somodevilla / Getty Images)

A reformed Wall Streeter sifts through the details of the Troubled Asset Relief Program.

Treasury Sec. Hank Paulson's $700 billion bailout plan now has a name: the Troubled Asset Relief Program, or TARP. But even as Capitol Hill debates TARP, few seem to have noticed the proposal item that puts taxpayers on the hook for future bailouts. It's in Section 6, and the key phrase is this: "The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time."

What does "at any one time" actually mean to economists? It means that if everything we American taxpayers buy re-evaluates down to zero, we get to buy more. That's hardly taxpayer "protection." With several hundred billion dollars of write-downs already announced this year by the part of the industry compelled to post their losses, it's a safe bet that $700 billion worth of the junkiest assets in existence will be heading to zero the second they are purchased.

[rateyes]

1. In other words, it's codified and permanent.

Weasel.

[JDPriestly]

2. I call Paulson's plan the Predators' Protection Plan.

That's what it is. It is a plan to protect the predator lenders. With this plan, they get bailed out, face no consequences for their reckless lending of other people's money and sneak away under the cover of the "Everything's OK now. Just turn off your lights and go to sleep. Under control."

Like the skunks in the night, the predators that this plan is intended to protect will return to leave their mark on future generations. This is what greedy souls do when given the chance. How do you get rid of skunks? That's what we should be doing. Getting these skunks out of our economy. We need to put up fences they can't cross and put out traps to catch them. The Predators' Protection Plan will neither discourage the skunks' future forays into our financial system nor trap them. It's not good.

[crickets]

3. "at any one time" - meaning there could (certainly will) be other times in the future.

If this thing passes, we'll be asked to bend over again and again and again... :grr: