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Back in September, 2008, as the subprime mortgage crisis reared it's ugly head, our government formulated the Troubled Asset Relief Program (TARP) to buy toxic assets from banks in order to make our financial institutions liquid agaiin. Treasury Secretary Hank Paulson told America that if we didn't act immediately, we faced a complete failure of our financial system. There was not a moment to lose. About a week later, Paulson was given $700 billion to purchase the toxic assets. Our politicians blamed Wall Street greed and a lack of regulation for the subprime crisis.
That was then.
Fast forward to today. Here we are, SIX MONTHS LATER. Trillions of taxpayer dollars have been spent. Banks have been bailed out. Wall Street has been bailed out. All kinds of people have been bailed out. On top of that, the government passed the largest stimulus bill and the largest spending bill in American history. We have trillion dollar yearly deficits projected as far as the eye can see. Our country is on a path to bankruptcy, as Sen. Judd Gregg noted yesterday.
But the real slap in the face is this:
All those toxic assets are still sitting there on the books of the financial institutions, and no regulatory changes have been put in place.
I repeat, this is SIX MONTHS LATER (government's idea of 'not a moment to lose') , and what we were told was the root of the economic problem HAS STILL NOT BEEN ADDRESSED, not one bit. Subprime mortgages haven't been eliminated either, for that matter. All our government has done is to throw enormous amounts of money toward the favored few, with precious little oversight.
And Americans are supposed to be outraged about some piddly AIG bonuses (that our government actually approved before they were outraged about) ??? NO. 'Fraid not. I'll let someone else drink that Kool-Aid.
Today, SIX MONTHS and TRILLIONS OF DOLLARS later, the government is finally getting around to the actual issue at hand, the toxic assets. Golf clap for the government. The Obama administration has announced the Treasury's Toxic Asset Plan Will Cost $1 Trillion. Good news. Yeah, it might cost us ANOTHER trillion, but at least Obama and company are getting to the point. The new program is supposed to regulate the financial industry too.
Listen to this description of Uncle Sam's new, new, new deal:
The Obama administration's latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks' books.
Sound familiar ? It should. It's basically the TARP plan, with some extras. But this time, they actually will buy up the toxic assets (they wouldn't pull a bait and switch on us twice, would they ?) Americans will, at long last, finally be the proud new owners of all those lousy loans, which will be an improvement. At least those lousy loans have SOME potential for a return on our investment, because most of them are backed by an actual asset, a house.
I can hardly wait for the forthcoming pleas from the government, telling us that if we don't pass the Public-Private Investment Program IMMEDIATELY, the entire financial system will collapse. That should be entertaining. I only hope we won't be hearing the same story six months from now.