Tuesday, November 11, 2008

From Euphoria to Postpartum Blues

As I told fellow blogger Charles Amico earlier today, a week after the election I'm experiencing a form of political postpartum blues.

For nearly two years I, and millions of my fellow Americans, blogged, debated and sometimes argued about a day that has now come and gone.
And now that we've made our cases and either celebrated or licked our wounds, it's time to face the hard cold reality ahead.

If the US presidential campaign was
a very long and very difficult pregnancy and Election Day represented the birth of a "new day in America" then I see the year ahead as being the equivalent of late night feedings, diaper changes, teething, and caring for a colicky, if not downright sickly, baby.

Like all new parents, the majority of Americans are overjoyed, hopeful and anxious to capture every moment of the new political baby's life. Even the overseas relatives are caught up in the joy of the blessed event. However, now that things are settling down it is clear that while the parents were completely distracted a few family members were helping themselves to everything in the house that wasn't nailed down.

As the Washington Post reported yesterday, the US Treasury Department conveniently found a way to slip a few dollars out of the household piggy bank and slide it under the table to the banking industry.

As Amit Paley reported in his article " A Quiet Windfall for U.S. Banks":
" The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."

The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.

Meanwhile, those mischievous children over at AIG were once again proving that they simply can't be trusted with the cookie jar.

Craig Harris reported the following for The Arizona Republic:

" Days before American International Group received its latest government bailout on Monday, the troubled insurer hosted a $343,000 conference for independent financial planners at the Pointe Hilton Squaw Peak resort in Phoenix.

The company said sponsors picked up roughly 93 percent of the tab for the Nov. 5-7 conference, but the spending still drew the ire of a member of Congress and raised questions about how AIG should be operating when it is under such intense scrutiny.

The Phoenix conference was at least the second time since September the company was involved in a six-figure event at a resort. A spokesman Monday said the company has canceled more than 160 meetings or conferences in the past month.

AIG said it decided to host nearly 150 financial planners at the Pointe Hilton Squaw Peak event because of the valuable training they received and the revenue they produce."
Ok, at the risk of seeming obtuse, can someone explain to me why if these guys are producing so much revenue US taxpayers are bailing out their company. Just a question.

Not to be outdone by anyone, the rich relatives over at Exxon made their own bit of history when they announced their 3rd quarter profits.

CNNMoney reported just a few days before the election:
"Exxon Mobil Corp. set a quarterly profit record for a U.S. company Thursday, surging past analyst estimates.

Exxon Mobil (XOM, Fortune 500), the leading U.S. oil company, said its third-quarter net profit was $14.83 billion, or $2.86 per share, up from $9.41 billion, or $1.70, a year earlier. That profit included $1.45 billion in special items.

The company's prior record was $11.68 billion in the second quarter of 2008.

The latest quarter's net income equaled $1,865.69 per second, nearly $400 a second more than the prior mark."

Maybe we should ask Exxon to pick up the tab for AIG.

And finally, membership definitely has its privileges. Christmas came on Monday night for credit card giant American Express when the US Federal Reserve granted their request to become a commercial bank. Now AMEX too can get a slice of the $700 billion bailout pie.

Oh well, so much for election euphoria, I think a dirty diaper needs to be changed.

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