Sean Brodrick writes: By the time you read this, America will have a new President. I hope he's better with money than the last resident of the White House. Just look at how the Bush gang is spending the $700 billion bailout package for banks — throwing it at financial institutions with few strings attached.

As a result, many Wall Street institutions are using billions and billions of taxpayer dollars to pay for fat cats' bonuses.



Goldman Sachs, which is getting $10 billion from the bailout plan, is paying out $6.85 billion in bonuses, according to media reports. That's $210,000 per employee. And that's despite a 47% drop in its profit and 53% drop in its share price.
Morgan Stanley, which is also getting $10 billion from our government, is doling out $6.44 billion in bonuses or $138,700 per employee, even though its profits tumbled 41% and its shares are off by 69%.
And even the failures at Lehman Brothers are collectively getting over $1 billion in bonuses.


Some conservatives have been bemoaning the “nationalization” of America's big banks. Yet we didn't nationalize anything — we don't control those banks. They're free to spend the bailout money as they please.

And we got hosed.

If Only We Got A Deal Like Buffett Did …

Just compare the deal Uncle Sam got for Goldman Sachs shares to the deal Warren Buffett made.

Warren Buffett invested $5 billion in Goldman Sachs in return for preferred stock and warrants to purchase common stock in the future. Buffett's preferred shares pay a sweet 10% dividend.

But Goldman and the other big financial institutions needed more money to cover their bad bets.

So, 20 days later, Treasury Secretary Hank Paulson came along and made an investment for preferred stock and warrants in nine banks. Only the government's preferred shares pay a measly 5% dividend.


Thanks for looking out for us, Hank!
It gets worse …

United Steelworkers Union president Leo Gerard recently wrote in a letter to Paulson that seems to ooze anger:

“Dollar for dollar, Buffett received at least seven and perhaps up to 14 times more warrants than the Treasury did, and his warrants have more favorable terms.”

Is it relevant that Paulson used to be the head of Goldman Sachs, one of the financials being bailed out?

Heck yeah!

Under his stewardship, Uncle Sam ended up paying $125 billon for what Warren Buffett thought was worth just $62.5 billion.

If the rest of the $700 billion bailout is dispersed using the same math, we'll be gifting $350 billion to America's biggest bankers — those bonuses have to come from somewhere — and then overpaying for what the other $350 billion buys us.

One Thing the Banks Are Not Doing With the Money:
Loaning It Out Like They Were Supposed To …

In their defense, the banks are saying that no one is queuing up for loans. Su-u-u-u-re. Just tell that to any auto dealer who can't get money together to make payroll.

One place where big investment houses and banks did decide to put money to work was in shorting stocks.

A bunch of financial firms lined up to short Volkswagen. It seemed like a smart move, right? Cars sales are tanking. Problem is, at the same time, Porsche was stealthily buying Volkswagen shares until it acquired a controlling interest. Then the short squeeze was on. Those bailed-out firms suddenly had to cover their short positions and lost billions of dollars.

Some of them lost more on the Volkswagen deal than they ever lost on Lehman Brothers imploding!

The banks' post-bailout behavior — no loans, blowing bailout money on bad investments — irked Barney Frank, chairman of the U.S. House of Representatives Financial Services Committee, one of the people who helped Paulson ram the Emergency Economic Stabilization Act of 2008 (EESA) through Congress.

Frank is supposed to be one of the “smart ones” in Congress. Here's what he had to say:

“I am deeply disappointed that a number of financial institutions are distorting the legislation that Congress passed at the President's request to respond to the credit crisis by making funds available for increased lending. Any use of these funds for any purpose other than lending — for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc. — is a violation of the terms of the Act.”

Nice words. Too bad they're as hollow as a rotten log.

The language of the bailout does talk about homeowner assistance … limit executive pay … provide for government audits … etc. But it doesn't dictate serious limits on how the banks can use the money. Barney Frank may have thought he had an understanding with Paulson, Fed Chairman Ben Bernanke and the big banks.

But that's like having an understanding with Al Capone.

Seriously … If Frank is as smart as everyone says he is, and he's making a deal with banks that have already shown they're capable of blowing hundreds of billions of dollars on derivatives, shouldn't he demand what he expects from them in writing before handing them a big bag of our money?

I guess I shouldn't single out Congressman Frank. Plenty of others in Congress went along with Paulson's plan. They say you get the leaders you deserve. But did we really deserve this?

The $700 Billion Bailout Is a BIG, FAT FAILURE!

Have you heard the chuckleheads on CNBC line up to say: “The government can end up making money on this bailout”?

Sure, when pigs fly!

The plan is that as the housing market recovers, the government will sell its holdings — all that worthless mortgage paper from the banks — and recoup its money. Never mind that many of those mortgages will never pay off … that there was outright fraud … that inflation is going to eat up any remaining value of the collateralized debt obligations.

In short, this plan won't work.

The sad thing is this $700 billion financial Frankenstein is just a drop in the bucket of the wholesale looting of the public purse that has gone on under the Bush Administration. Over the past eight years, Bush added approximately $5 trillion to the national debt ceiling.

The point of my rant here is that the U.S. government has blown $700 billion — and much more — bailing out criminals in pin-striped suits who got themselves into a multi-billion-dollar mess of their own devising, and then they insist on giving themselves bonuses !

It's High Time to Stop Bailing Out These Bums …

There is going to be another bailout. I know, after all the facts I've laid out for you here, you probably want another government bailout like you want to have your liver extracted by a guy with a switchblade.

But as long as Washington can print money, they'll throw it at problems. So I have a suggestion for the next President: Stop bailing out Wall Street fat cats.

I don't care how much they scream about how they're the underpinning of America's financial system. If Wall Street bankers cannot survive after all the money we've thrown at them, tell them to drop off the banks' keys at the U.S. Capitol. We'll find someone else who can do the job.

And while we still have some money left in the Treasury … while the U.S. dollar still holds some value … please spend the money on something useful.

And consider …

Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth. And the rate may soon approach one in four. About 7.63 million properties, or 18%, had negative equity in September, according to a report by First American CoreLogic.
Manufacturing in the U.S. contracted in October at the fastest pace in 26 years.
Over one million jobs have been lost in the last 12 months. In September, another 159,000 jobs disappeared.
Never mind recession — we could be headed for Depression.

All I can say is it appears that the tax cuts will continue to go to the wealthy...

I am a democrat but even I can tell when someone is the devil and spells the end of Christianity.

Mr. Obama has now opened the flood gates for Muslims to enter this country illegally which is what the east wanted.