Hank Paulson

The Story of Citigroup's Extraordinary Financial Assistance

SIGTARP released a new audit report, Extraordinary Financial Assistance Provided to Citigroup which should shock and awe.
Citigroup was bailed out in November 2008, with $20 billion dollars plus $301 billion in asset guarantees. Now the Special Inspector General of TARP has gone back and done an audit, a forensic accounting of what really happened.

It appears Citigroup poses systemic risk was just screamed from the roof tops like Chicken Little and the solution was to throw money at it. No one bothered to check if this was even true, that Citigroup presented a systemic collapse of the global financial system if it failed. Even worse, while systemic risk is so complex, kind of a domino theory of multi-dimensions, yet to ascertain the possibility, it was implied why bother? From the report:

First, the conclusion of the various Government actors that Citigroup had to be saved was strikingly ad hoc. While there was consensus that Citigroup was too systemically significant to be allowed to fail, that consensus appeared to be based as much on gut instinct and fear of the unknown as on objective criteria. Given the urgent nature of the crisis surrounding Citigroup, the ad hoc character of the systemic risk determination is not surprising, and SIGTARP found no evidence that the determination was incorrect.

Hank Paulson & The Committee

The House Oversight Committee held part III of their hearing Bank of America and Merrill Lynch: How Did a Private Deal Turn Into a Federal Bailout? This time the key witness was former U.S. Treasury Secretary Hank Paulson.

Frankly, Stonewall Hank just let Ben Bernanke off the hook, with claims of Fed Privilege and confusion to deny the Federal Reserve threatened BoA, as well as it's clear Hank Paulson threatened BoA CEO with losing his job if he didn't go through with the Merrill Lynch merger, but the issue is what isn't being answered.

Paulson wants second $350 billion; Obama may help

The Washington Post reports that:

Treasury Department officials are laying the groundwork for seeking the second half of the $700 billion financial rescue package from Congress ... [but w]ith lawmakers on both sides of the aisle expressing heated opposition to such a request, Treasury officials have come to realize that they need the president-elect's help to obtain the rescue money, the sources said.

The Treasury aired the possibility of seeking the second half of the funds with transition team officials, who said they would attend a meeting with lawmakers and the Bush administration if the department pulled one together.

The Ghouls of the Economy Who Still Haunt US

Demons of Finance
It's Halloween! As candy, costumes and parties parse the night, we have our own goblins, ghouls and ghosts haunting economic policy.

Our current trickster is Treasury Secretary Hank Paulson, with his keys to the treasury purse via the Congress approved bail out

The United Steelworkers President, Leo W. Gerard, spelled out in a letter how the US taxpayer is being robbed blind. He does not mince words. An excerpt:

Why something should be done

I'll be honest, I never wanted to write up a diary piece like this. A week ago, like many of you, my feelings on "bailing out" Wall Street was equally negative. Why? Why in the name of all that is decent should we clear up the bad judgment of folks who really do not care about the common folk?

For years, folks who would be identified as the type who would get the jobs of running organizations like Goldman Sachs or Lehman Brothers, were considered "Masters of the Universe." For them, we, you and I, were the dirty lowers against their kind. We existed to supplement their income. But now the veil has been lifted, and we see now that they are not masters of anything but their own greed and stupidity.