This Should Suprise No One

Word is that the Bush administration overpaid for bank assets as part of their TARP program.

The Bush administration overpaid tens of billions of dollars for stocks and other assets in its massive bailout last year of Wall Street banks and financial institutions, a new study by a government watchdog says.

The Congressional Oversight Panel, in a report released Friday, said last year’s overpayments amounted to a taxpayer-financed $78 billion subsidy of the firms.

While it hurts, and at $78 billion it really really  hurts, this is no small thing.  $78 billion  is enough money to send each man woman and child in America $260 bucks.  Now, don’t get me wrong, sending each person in America $260 is not my idea of a stimulus, but the point has to be taken.

What makes this especially hard to swallow is the fact that this money was mean to prop up our financial institutions.  To be honest, when TARP was first announced, I was a critic and spoke out against it [to be fair, I am still hesitant].  However, after reading and taking a look at the facts I came around.  After all, our economy is based on capital; that is the selling of money from one institution to another.  When that process stops, when people are no longer able to obtain money for investment, that’s when we stop doing what we do best:  PRODUCE.

And so it came to pass that I begrudgingly began to warm to the idea of helping these guys out.  But that was when help was targeted to the very place that was perhaps ground zero; the bad paper caused as a result of number of bankruptcies.  When these loans were bundled by the hundreds and sold off, in essence they were chopped and split and dispersed to every investor who purchased a share.  Because of that it became very difficult to “know” the value of those shares.  nd so the market dried up, you couldn’t sell these things anymore.  This isn’t to say that they weren’t worth anything, clearly a majority of the loans were still, and even to this day are, viable.  But no one knew what their value was, and so they couldn’t be sold.

So the idea was that Paulson would buy up these assets, or bad paper, freeing the banks and lending institutions of them.  See, ya can’t lend money when you are over extended.  And in essence, this paper was worth Zilch and so all banks were forced to freeze lending.  But, Paulson changed his mind, bought up shares in banks and ended up over paying for them.

And this gentle reader, is a lesson in the tender mercies of Government Administration.  The fact is, when the government acts, it is almost ALWAYS for reasons other than for what is good and healthy.  There is always an eye out for the powerful, the political and the electability.  And because of this, decisions are almost always bad.

All government sucks.  The liberal and the conservative.  The answer is to reduce and remove.  Put the power in the hands of the people.

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