Bankruptcy

No One is Talking About how to Pay for These Bailouts!

By J. Michael McBride

“Even though the government has now formally agreed to guarantee the debt of Fannie and Freddie, the White House says it doesn't see the necessity—shock me!—to include the cost of doing so in the budget.… Consider the spree of actions that have the potential—directly and indirectly—to cost taxpayers money: the government accepting $30 billion of Bear Stearns' drecky collateral for a $29 billion loan to JPMorgan, giving investment banks access to the discount window, assuming responsibility for Fannie Mae and Freddie Mac, guaranteeing money market funds (up to $50 billion), making a big loan to AIG (up to $85 billion), and now proposing the mother of all bailouts—up to $700 billion. …Think about everything Wall Street has been given since the late 1990s: cuts in the capital-gains tax, dividend tax, and estate tax; cuts in marginal income tax rates; free-trade agreements; low interest rates; light regulation. The promise was that doing the bidding of the financial-services industry would deliver solid growth and boost incomes for everyone. It didn't. This business cycle, in which job growth was generally anemic, ended with median incomes about where they were at the end of the last business cycle. The S&P 500 is basically where it was 10 years ago. Sure, we got cheap mortgages, all the credit we could eat, and some higher corporate income-tax payments for a few years. But now Wall Street wants it all back in the form of bailouts.”

Read more of this article on Slate.com here:
http://www.slate.com/id/2200604/

Michael

Full post as published by Texas Lawyer Blog on September 23, 2008 (boomark / email).