I come at this development from a different perspective than Rep. Dennis Kucinich (D., Ohio), but one doesn’t need to reside on the same planet as he to find something troubling about the bailout phenomenon he describes:
Congressional investigators are criticizing the Obama administration for failing to police deals in which banks participating in the $700 billion federal bailout lent billions of dollars overseas, highlighting the growing political tension over the extent of government involvement in firms receiving taxpayer funds.
A report by a House oversight panel, which was described to The Washington Post in advance of its release this week, raises questions about a $8 billion financing deal for Dubai by Citigroup (recipient of at least $45 billion in bailout funds); a $1 billion investment in India by J.P. Morgan (which got $25 billion from the government rescue); and a $7 billion investment in China by Bank of America (which got $45 billion from the bailout).
. . . Under the bailout’s largest program, only the 20 largest recipients of money are required to file reports with the program’s overseers, the report said, while the other 297 are not. The investigators also said that Treasury has not deployed personnel to any of the largest participants, other than a minimal presence at two. Even the filings required of the 20 largest recipients provide general monitoring of the bailout money’s impact on lending activities, not the overall use of the taxpayer dollars, the subcommittee concluded.
The article notes than none of these overseas deals are illegal, and because the money is fungible, it’s impossible to say that these deals were “funded” with bailout cash.
Kucinich chairs the committee that produced the report, and he declares, “When the American people find that their tax dollars, which were supposed to be used to get us out of this financial crisis, instead are being used to ship jobs and investments overseas, there will be outrage.”
When businesses take huge gambles and lose, and find themselves in financial dire straits, it is a bad idea for them to turn to the federal government for a bailout. When the government does provide the lifeline of cash, then they indeed ought to be able to attach some strings — i.e., the $500k pay cap for senior executives, etc. Of course, this means that every private decision — whether to complete deals in Dubai, India, and China — is now subject to public scutiny and de facto approval . . . which is why these bailouts should be avoided whenever possible.
There’s another item in that article that seems almost unbelievable — 297 institutions that have received bailout money are not required to file reports with the program’s overseers? Can that possibly be true?