Morning Bell: Dodd Bill Creates Permanent TARP and You Can Quote That

Morning Bell: Dodd Bill Creates Permanent TARP and You Can Quote That

Posted By Conn Carroll On March 26, 2010 @ 9:24 am In Enterprise and Free Markets | No Comments

The Dodd-Obama Permanent TARP [1]

In mid-October 2008, at the height of the Presidential campaign, Heritage Foundation analyst Rea Hederman began receiving emails [2] alerting him that he was a star in a new multimillion-dollar ad campaign for then-candidate Barack Obama. The ads claimed that Hederman believed the middle class would be better off under the Obama tax plan. Nothing could have been further from the truth. In fact, Hederman’s analysis of the Obama tax plan [3] found the exact opposite: that Sen. John McCain’s (R-AZ) tax plan would produce twice as many jobs as then-candidate Obama’s plan and leave middle-class families with, on average, $1,500 more in after-tax disposable income.

Now President Obama’s minions are at again, blatantly misquoting Heritage Foundation analysts in a desperate attempt to make their far left big government agenda appear to be centrist. This time the culprit is Deputy Secretary of the Treasury Neal Wolin, who told [4] a U.S. Chamber of Commerce summit this week:

On Monday evening, we took an important step towards final enactment of financial reform. The Senate Banking Committee has now voted out a comprehensive bill. Along with the bill passed by the House last December, it represents a strong foundation on which to build a safer financial system.

This should not be a partisan or ideological debate. As David John of the Heritage Foundation has said, “Taxpayers should never again be forced repeatedly to bail out financial services firms like AIG because a company poses a risk to the entire financial system and regulators lack the necessary tools to close the company safely.”

The quote is accurate; [5] The Heritage Foundation does believe that we need financial reform that will ensure taxpayers never again have to bail out Wall Street, but it is 100% false to insinuate that Heritage believes the bill written by Sen. Chris Dodd (D-CT) and passed out of committee this week is the solution to that problem.

Here is, in fact, what John has written [6] about the Dodd bill:

The Senate Banking bill proposes to create a new $50 billion fund to be used in “emergencies” to close or restructure failing financial institutions or those perceived as being in danger of default. This fund is certain to be used for bailing out any politically significant financial institution and is nothing less than a permanent TARP program.

Despite rhetoric about using bankruptcy for most failures, the draft makes it clear that this is to be handled through a bureaucracy subject to political pressures, since the bill also does not include language adapting the bankruptcy process to the special needs of complex international financial institutions.

In other words, not only does the Dodd bill not prevent future taxpayer-funded Wall Street bailouts, it virtually guarantees them forever. Just as the original $700 billion TARP fund quickly devolved into President Obama’s personal slush fund [7], the Dodd bill empowers the Treasury Secretary to take over and liquidate any financial firm at any time, and no one can stop him. The Independent Institute’s Peter Klein adds [8]:

Perish the thought, but suppose a secretary of the Treasury has a crony who really wants to buy an investment bank on the cheap—and will provide some future quid pro quo. Pick a time when equities are down and you could make a case that a financial company is wobbly. Voila, it gets liquidated in a fire sale.

And so it is business as usual in the Obama White House. The empowerment of big government, the enrichment of cronies, all justified by phony bi-partisanship and centrist rhetoric. Don’t be fooled. The Dodd bill and the Obama agenda take the worst of our current financial system and puts it on steroids.

Quick Hits:

$2.7 billion in TARP money went to British Rum maker

$2.7 billion in TARP money went to British Rum maker

Yep. We taxpayers now have “a little Captain in all of us.” Too bad it’s because our tax dollars went to the rum distiller who makes Captain Morgan rum.

Via Crooks and Liars we get the not surprising news that the $750 billion we shelled out in TARP to save American banks ended up lining the pockets of just about everyone else except our troubled financial institutions.

With that much free money floating around, it was bound to happen. Any idiot could have predicted it – which makes Paulson, Bush, Geithner, and Obama certifiable loons if they didn’t see this coming.

Ryan Donmoyer of Bloomberg has the incredible details:

In June 2008, U.S. Virgin Islands Governor John deJongh Jr. agreed to give London-based Diageo Plc billions of dollars in tax incentives to move its production of Captain Morgan rum from one U.S. island — Puerto Rico — to another, namely St. Croix. DeJongh says he had no idea his deal would help make the world’s largest liquor distiller the most unlikely beneficiary of the emergency Troubled Asset Relief Program approved by Congress just four months later.

Today, as two 56-foot-high (17-meter-high) tanks for holding fermenting molasses will soon rise from the ground on the Caribbean island of St. Croix, the extent to which dozens of nonbank companies benefited from last October’s emergency financial rescue plan is just beginning to come to light.

The hurried legislation adopted by a Congress voting under the threat of sudden global economic collapse led to hidden tax breaks for firms in dozens of industries. They included builders of Nascar auto-racing tracks, restaurant chains such as Burger King Holdings Inc., movie and television producers — and London’s Diageo.

“It’s kind of like the magician’s sleight of hand,” says former House Ways and Means Committee Chairman William Thomas, a California Republican who ran the committee from 2001 to 2007 and oversaw all tax legislation. “They snuck these things in a bill that was focused on other things.”

And this is the tip of the iceberg. Anyone know where the stimulus money is really going? How about the trillions the Federal Reserve has paid out to keep banks in the business of lending short term to corporations so they could pay their employees (supposedly)?

The problem with truly eyepopping amounts of money – besides the fact that it adds to the deficit and the long term debt – is that it is virtually impossible to keep track of. Untold billions – perhaps hundreds of billions of dollars – has been handed out to people and companies who don’t deserve it and had no business getting it in the first place.

It’s like piling up stacks and stacks of hundred dollar bills – perhaps several dozen stories high – and just lighting a match to it.

Oh well, not to worry. There’s more where that came from. The generosity of us taxpayers will see to that – or at least, the generosity of Obama and the Democrats who don’t believe your money is yours anyway. They think it is the government’s money and that it is their decision just how much of your money you get to keep rather than you deciding how much the government gets.

Next time you have a Mojito or a Cuba libra, remember: Your tax dollars are helping the world get sloshed.


Page Printed from: at June 29, 2009 – 12:38:23 PM EDT