SUN EDITORIAL:

Paulson’s bailout blues

Acting on his own instincts, Treasury secretary not succeeding in reviving the economy

Sunday, Nov. 16, 2008 | 2:06 a.m.

President George W. Bush has been largely silent on the $700 billion bailout bill that he signed Oct. 3.

He has given Treasury Secretary Henry Paulson all the power over the money, even though the frightening economic forecast calls for leadership from the White House.

Taking advantage of some flexibility built into the bailout bill, Paulson is moving fast on a route that does not appear on any planned road map for avoiding a recession.

On Wednesday he announced the official end to the original route, which had the government going from bank to bank buying much of their “troubled” assets, a word that quickly morphed into “toxic.”

As is known, though, Paulson early on had unofficially abandoned that route. He instead went from bank to bank, investing hugely in their operations on the assumption they would start lending again, firing up the economy.

Instead banks began using most of their bailout money to buy weaker banks, pay dividends to investors and shore up executive salaries and bonuses. The economy has not responded to this government investment in private banks. In fact, it is getting worse.

Paulson has also abandoned other aspects of the original plan, such as tracking how the money was being spent and publicly posting this specific information on the Internet.

Fortunately, Congress released only half of the bailout money, which is nearing depletion. Congress should now ask Paulson why his expenditures have not improved the economy.

If it does not get good answers, Congress should consider releasing only small amounts of money at a time from the other half. And then only if the money’s destination is well explained and meets with approval.

Discussion: 3 comments so far…

By uddeboda

11/16/08 at 3:18 a.m.

Suggest removal

There is nothing wrong with injecting funds into the banks and financial institutions that are in trouble. The problem is Henry Paulson, who used to work for Goldman Sachs until 2006 as one of their TOP executives with a salary of $37000000 in 2005, and a personal fortune est at $700 million. Here was a man who knew all the dirty tricks of the trade, and made G Sachs into a world top name. Bushes advisors knew what they were doing to get him as S of Tr, and now he is rewarding his old buddies with huge bailouts with little or no strings attached, even his old employer got $10000000000. Its always wise to make a nice little cosy bed for yourself, when "HE" will be out of a job in Jan 2009.
Its only natural for Paulson to have done what he has, its inborn in him after all the years he spent working in big banks, so it is only natural for him to bailout his buddy banks across the country, with huge funds and absolutly NO STRINGS attached. Now the banks etc are hoarding these funds to pay their top people better salaries, better bonuses and better dividends to the shareholders.
As the saying goes, " A blind man on a galloping horse could have seen what would happen"
By Teaser

11/16/08 at 7:01 a.m.

Suggest removal

The ultra rich saw the writing on the wall and took whatever remaining resources they could get, while they could still get them. That, too, is what happened at the time of the first Great Depression. History truly repeats itself. I never voted for Bush, but I'm sure as hell getting what all of those other voters deserve.
By LasVegasRocks

11/16/08 at 7:23 a.m.

Suggest removal

It's called "bait and switch."

Paulson and the Bush administration cried WOLF one more time, got Wall Street a $700,000,000,000 welfare check and now they will not help "joe-six-pack," just large bankers and corporations.

Never, ever trust a republican in office.