Pigs at the trough

It's almost too much to digest at once, the new revelations over how various aspects of the sundry bailouts came about.  The information is too much, the outrage is too much.  But let's try.

First comes word that Hank Paulson rewrote tax law without Congress's say-so, giving the banks a $140 billion tax windfall.  Now one could argue the tax law Paulson circumvented was a dumb idea, but even mainstream analysts who don't fuss over the plain language of the Constitution say Treasury overstepped its bounds here.  I hope conservatives who hailed the "unitary executive" philosophy of Team Bush might be rethinking things by now… but I doubt it.

Meanwhile, Paulson and Ben Bernanke have gone back on their promise to disclose just who's benefiting from all the Fed's emergency loans.  $2 trillion, no transparency.  To its credit, Bloomberg News has filed a lawsuit under the Freedom of Information Act to bring this out into the open.  (What if the Fed pleads it doesn't have to comply because it's not a government entity?  No, I don't really want to go there on a Monday morning…)

While the Bloomberg folks are at it, they might want to get their hands on Hank Paulson's phone records.  Over the weekend, one of the Seattle papers reported this:  Two months before Washington Mutual collapsed, Paulson told WaMu's CEO he ought to sell out to JPMorgan Chase because his company was in such poor shape.

So Big Hank knew bad things were going down.  It's enough to make me rethink the notion that Paulson and Bernanke were just making it all up as they went along.  Maybe in fact the bailout bill was sitting on the shelf, waiting for the right moment to be rammed through Congress, just like the Patriot Act.

And to add insult to injury, AIG just got a do-over on its bailout.  Neat trick.  How many of us can consolidate two loans we took out barely two months before?  And up the amount of the loan by 22 percent?

Had enough for one morning?  Yeah, me too.  Meanwhile the media will be fixated today on the face-to-face between the incoming president and the outgoing one, and what kind of body language the incoming and outgoing first ladies will demonstrate.

Can I just crawl into a hole for the next 15 years or so?

The Daily Reckoning