Paulson Goes Rogue With Bailout Funds

Am I the only one who thinks Treasury Secretary Henry Paulson's handling of the government's $700 billion bailout fund is totally out of control? He appears to be making it up as he goes along, and what's worse, no one is minding the store, with key oversight provisions not yet implemented, even though $290 billion has already been spent.

I kid you not! Today's Newsday reported that “no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been done, though the deadline has passed.”

“It's a mess,” Eric M. Thorson, the Treasury Department's inspector general, was quoted as stating. Mr. Thorson, who has been overseeing the bailout program until the newly created position of special inspector general is filled, added that: “I don't think anyone understands right now how we're going to do proper oversight of this thing.”

“Some lawmakers and their aides fear that political squabbling on Capitol Hill and bureaucratic logjams could delay their work for months,” Newsday reported. “Meanwhile, the Congressional Budget Office, which also has some oversight responsibilities, is worried about the difficulty of hiring people who can understand the intensely complicated financial work involved.”

This is just great. Congress was given the bum's rush to pass the bailout fund, with Secretary Paulson reportedly going so far as to get on his knees to beg House Speaker Nancy Pelosi to approve the plan.

But in a classic bait and switch, the bailout money is not going towards what sold the concept to us in the first place–buying up bad loans and toxic subprime-based securities to clear them off the books and give holders breathing room to start lending again. After all, the fund is called the Troubled Asset Relief Program. Instead, Paulson went off on a shopping spree, buying up equity positions in private firms.

While Paulson was given wide discretion to administer the program, he wasn't handed a blank check, and he was certainly supposed to have auditors looking over his shoulder as he issued checks for billions.

Of course, it isn't his fault the executive and legislative branches didn't fulfill their obligations to staff key oversight posts, but the taxpayers are left with essentially a one-man band here–led by a man who will be marching out the door in two months with the change in administrations, meaning the next Treasury secretary will have to clean up whatever mess is left behind.

In the meantime, while Mr. Paulson has assumed dictatorial powers over how the federal bailout funds are spent, he threw his hands and claimed he has no authority to even provide a temporary bridge loan to struggling auto makers without further congressional action. He says he is restricted to helping out financial firms, not manufacturers, even though automaker bankruptcies could cripple the economy just as severely as any Wall Street collapse.

Perhaps the auto manufacturers should just follow the lead of others and reconstitute themselves as bank holding companies to get a piece of the pie. Indeed, I am thinking of declaring myself a bank holding company so that I may get a share of the bailout funds to cover the losses in my retirement account!

Our government is running around like a chicken with its head cut off! Good luck to President-Elect Obama in getting a handle on this latest debacle generated by the Bush administration–with the support of clueless Democrats in Congress who failed to keep tabs on how the bailout money is being spent!

What do you folks think???