I join Jen Rubin in wondering why I’m hearing more objection to Treasury Secretary Tim Geithner’s bank rescue plan from Paul Krugman than from Congressional Republicans.
If you thought the $165 million in AIG bonuses was worth your anger, why would you shrug your shoulders at a $1 trillion dollar deal in which the risk is wildly disproportionately on the taxpayer? For that matter, where are the liberal blogs, and/or Democratic lawmakers? It’s been a strange muted tone from those who usually howl at bailing out “Wall Street fat cats.”
One other angle: there’s a rumor that AIG has been deliberately making bad deals with banks in a backdoor manner of helping them look healthier than they are.
One of the news items that had cheered investors recently was the declaration that Citibank and J.P. Morgan Chase had pretty good numbers January and February, suggesting the worst is over and that the banking sector is finding stable footing. (Since then, J.P. Morgan Chase’s CEO has said March was “a little tough”, and Bank of America made similar comments.)
If the rumor’s true, it’s a pretty big deal — and suggests that the AIG bailout funds are being misused in ways much, much bigger than the bonuses.
Anyway, earlier today a CNBC anchor mentioned the rumor and said that “we certainly knew it.” An admission? Or some sort of bizarre April Fool’s Day joke?
Ordinarily, you wouldn’t have to worry that the Treasury Department was funnelling money to banks through AIG in a spectacularly dishonest banker. But when the Secretary puts out a definitive statement of how much remains in the TARP fund, and is off by $103 billion, it seems we are in uncharted territory.