Wednesday, March 11, 2009

TARP and the Congress: Neel Kashkari vs. Dennis Kucinich

Well, Mr. Kashkari underwent another multi-hour grilling by, this time, Kucinich's Oversight Subcommittee on Domestic Policy, and one wonders why he has chosen to subject himself to this continuing abuse.

The more I watch committee hearings on C-SPAN, the more I wonder how our country has survived. Although there are some smart people in the Congress, the number of idiots and ideologues (sometimes the same, sometimes not) surely exceeds their presence in the population (I hope).

First, Mr. Kashkari must deal with the incredible ignorance of the people who are questioning him. They know next to nothing about banking, about finance, about economics in general.

Second, they are like children who want their candy NOW! The stimulus package, passed less than a month ago hasn't worked yet! (The money has only started to trickle out the door). The 1/2 of the TARP given to the banks in the Fall hasn't stopped the recession. (Note: that wasn't its job. Its primary purpose was to stabilize the financial system.) And they don't understand that our financial institutions are in a precarious balancing act: they want to lend but they also have to maintain their capital levels (Tier 1 and, now, TCE)to avoid going bankrupt. Doesn't matter to these financial geniuses. The banks are supposed to do both.

Third, some are still angry because Treasury injected capital rather than bought up the bad assets - no matter that multiple people from the FED, FDIC and Treasury have explained what happened on multiple occasions. They still don't realize that buying up those assets has turned into a hugely complex problem - and Treasury, to its credit, realized it had to do something fast, something specifically authorized by the legislation (capital injection).

Fourth, he is constantly required to respond to conflicting ideological demands between the "free market over everything" and the "throw the bums out" groups.

Fifth, they don't understand that these multinational banks have customers and businesses around the world. They want the TARP money to be used "only" in the U.S. A few recognize that money is fungible, but still want to control how the banks conduct their business.

One of the dumbest questions/ideas came from Issa who thought it would have made more sense for the government to just buy up/renegotiate all the bad mortgages. It didn't occur to this doofus (although Kashkari did his best to gently point it out) that the government would have to hire thousands of employees who knew something about mortgages and those people would have to come from the very industries under scrutiny. Amazing, isn't it? Issa, foe of all government, convinced that the federal bureaucracy is the devil, thinks that same government should have gotten into the mortgage modification business down at the individual level.

The biggest complainer was Kucinich, appalled by the lack of oversight on how the money is being spent. Sure, it could probably be better. But since Sept., a new Administration has taken office, the economy has gone into a tailspin, banks are failing weekly, and the stock market may be headed toward 5000. You'd think it would have occurred to Kucinich that, just maybe, the Treasury has a lot on its plate and expecting penny-by-penny accounting of the money would be impossible under the best of circumstances and impossible given the speed with which the economy has deteriorated.


Anonymous said...

Excellent reading....too bad the liberal media can't print something to the same affect. Would be nice to see some decent reporting for a change.

YAB said...

Thank you.