No one will regret the passing of 2008, without doubt one of the worst years in recent history. In the last six months the nation suffered the worst financial crash since Black Tuesday 1929, and oureconomy is threatening to slip into another Great Depression. The year ended with the government appropriating billions of dollars intended to save the economy from disaster. Americans accepted the necessity, but the year 2009 should begin with a thorough accounting of what has been done with the money, where is it and how is it being used.
The Emergency Economic Stabilization Act of 2008 authorized the United States Secretary of the Treasury to spend up to $700 billion to purchase distressed assets, especially mortgage-backed securities, and make capital injections into banks. Where’s the money now?
The banks have been given more billions through the Federal Reserve system to be used to make credit easier. A necessary action; unless businesses and consumers have money to spend there is no chance of staving off a depression. However, when 21 banks that received at least a billion dollars were asked by the press to disclose how they are using
the millions, they refused to answer, suggesting that it was nobody’s business.
Atlanta- based SunTrust received $3.5 billion and it said “We’re not providing dollar-in, dollar-out tracking,” That high handed attitude is unacceptable.
Rumors are the banks are unwilling to account for the money because they are not using it to make loans, but hoarding
it. Squirreling away into cash reserves to protect them if the economy worsens. And that action is a sure way to ascertain it will.
Congressman Barney Frank, chairman of the House Finance Committee has been a supporter of giving away all these billions. When the 2009 session of Congress opens, his committee should begin the year by bringing before it the government agencies and demand to know who has been given tax payer money, and the bankers and other recipients forced to disclose how it was used. It must be the first order of business.
Waiting will make getting an accounting more difficult. One of the phenomena in America these days is that billions of dollars have a way of simply disappearing, We are told how a former head of a Wall Street stock exchange was able to steal $50 billion dollars from investors, but no one has said where the money is. It is impossible to spend $50
billion or to hide it. The federal government has been able to trace much smaller amounts in cases of fraud or embezzlement, surely they can find out what has happened to $50 billion. So where’s the money?
When Congress refused to give billions to the U.S. auto makers, believing rightly that normal business practices should be followed and the three companies forced to declare bankruptcy. In bankruptcy, before receiving help each auto company would have been required to submit a business plan indicating how the money would be used and demonstrate it would help them recover. And the heads of the companies could have been dumped. To prevent that, Bush managed to find the money somewhere and has given it to them. So it appears it will be business as usual in Detroit.
The sad fact is that the big three may be doomed to be the little two, leaving the major share of the car market to Japan. It’s a shame because for years now Detroit has been building cars every bit as good as Japanese cars.
At any rate, Detroit must reveal how it will spend taxpayer money.
So must the banks, so must the agency given several billion to reduced foreclosures, so must everyone who is feeding on all the money our government is giving away. To paraphrase a past U.S. Senator, “A billion here, a billion there, and pretty soon you’re talking real money.”