Tuesday: “We gave them free money to make themselves richer”

Elizabeth Warren

Elizabeth Warren gave an interview on Fresh Air yesterday.  Warren is the Harvard professor specializing in bankruptcy and consumer debt who has been tapped by Congress to follow the bailout money and find out what happened to it.  It’s a pretty bleak interview although there are moments of humor when Terry Gross, our typical Obot, tries desperately to find a silver lining in the presidency of Barack Obama.

In short, Warren is terse and angry with the way the bailout was handled.  She finally gets to the nugget of the problem at the end of the interview: the American middle class has been callously exploited by the finance giants because there are no rules in place that forbid it.  There were no rules regarding the fine print in mortgage contracts, an “anything goes” attitude for credit card companies and no requirements as to how to spend the bailout money or even that a report should be written detailing how it was spent.  The finance giants held us hostage and robbed us blind and NO one in Congress stopped them from doing it, especially the Senator from Illinois who  is now our president. (Remember how Hillary did the morning show circuit trying to get our attention to the mortgage provisions, or lack thereof, in the Paulsen bailout bill?  Do you Obots out there ever wonder about why Obama didn’t do that?  There are at least two reasons I can think of, neither of them pretty.)

The bankers got everything they wanted with Paulsen.  Going forward, it is impossible to say whether they are getting everything they want from Geithner.  Not only that but taxpayers got a lousy 66% return on investment from the bailout per dollar while investors like Warren Buffet got 125% for every dollar.  I think that refers to the tunneling thing we were talking about the other day.  All of the good assets are being scooped up by insiders while the taxpayers are being left with the worthless stuff.  Geithner exaccerbated it when he traded $45 billion in preferred stock in Citibank for $4 billion of common shares but no controlling interest.  This is the kind of deal we have been making with the robbers.

Warren also says that many of the financial institutions are not lending the money they have been given because they are stashing it way against future anticipated losses.  And at the heart of it all are the home mortgages.  One in five of us own a house whose value is now less than the mortgage on it.   The hapless homeowner may never recoup the value of the home.  Obama’s mortgage assistance program does nothing to help these people and the bankruptcy laws, written for the average person, not a banker, does not allow for a primary residence to be written down.  Even if it were allowed, many people prefer to avoid bankrupcy because the law that was passed a few years ago is so draconian.

The bottom line seems to be that no one is accountable and responsible for anything except middle class Americans.  We are also the people with the fewest protections.  It’s almost as if the New Deal never happened.  The Bushies have been successful beyond their wildest dreams.  We are unprotected prey.  They had control of Congress for eight solid years and with the flick of their wrist, just one Republican can filibuster any damn thing they want in the Senate.  They even managed to help elect a Democrat who is the weakest possible president we could have ever imagined in a time of crisis.  Terry Gross got audibly annoyed that Warren wasn’t singing his praises but this is the situation we are in. The afterglow is wearing off.   Obama is completely at the mercy of the wolves.  He got plopped right into the middle of a maelstrom and has no political compass to get him and us out of it.  This is what we, the Clintonistas, were afraid would happen.  It is not a time for “on the job training” and waiting for him to do something.  A responsible and ready president would have come into office with an armload of policies, cabinet already in place and a plan.  He has none of those things.

It really is that serious.  There are few avenues open to us to make it better.  The only slightly bright spot is the possibility that we can help filibuster proof the Senate.  We still have one senator outstanding, Al Franken of Minnesota.  Norm Coleman is fighting tooth and nail to keep him out of the Senate.  Franken still needs our help to pay his legal bills.  The campaign hit me up last night although I don’t have the amount they were asking for.  But every little bit helps.  If you want to seat another liberal Democrat in the senate, consider making a donation to his recount campaign.

In other news:

The drugmakers ensure that no new drugs will be forthcoming from either Merck or Schering for the forseeable future.  They announced plans for a merger yesterday, joining Pfizer and Wyeth in the merger market.  There was plenty of heart racing in the halls where I work.  Many of my colleagues have spouses who work at one of the four companies currently merging.  In a soft economy, these scientists, who have spent most of their lives getting their degrees, have few options.  Now, with the northeast corridor in danger of getting the boot, panic is starting to feel very real.  Meanwhile, the bean counters carefully negotiate how much money the shareholders will get from buying each other out while the projects for oncology, cardiovascular and other diseases languish as, the hiring freezes go into effect,  the managers rearrange the desk chairs and clueless consultants apply the latest trendy bizspeak to the future of research and development.  And cutting research is suddenly the new trend.  One can almost hear the corporate guys saying, “Those guys never get anything done anymore.  It’s just so hard to find good help these days.”

Damn, I should have gone for an MBA.  I could have been sitting on a big old wad of taxpayer cash right about now.