For those who believe that the stimulus legislation is a thinly veiled effort by both Democrats and Republicans to enrich friends and engorge budgets, they need only read the Congressional Oversight Panel report to confirm their suspicions. The panel has reported to the Senate Banking Committee this week that Treasury in 2008 paid $254 billion for assets worth only $176 billion. That is $78 billions that simply evaporated into the pockets of well-connected, well-heeled executives.
It is part of the Troubled Asset Relief Program (TARP), which may go down as the biggest rip-off of the American taxpayer in history. The windfall purchases were made by the Bush Administration in its waning days and specifically former Treasury Secretary Henry Paulson, who has earned a lot of street creed on Wall Street.
This result was inevitable given the Administration’s insistence that it did not want to bargain down prices on acquiring assets since the priority was to get money to these companies and banks. That was a virtual invitation for exaggerating the true value of these assets. It is like buying a car but insisting that the dealer not negotiate on what the vehicle is worth but what the dealer needs in terms of value.
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