The Republicans aren’t done yet, as Robert Reich points out…
Hank Paulson has just about burned through $300 billion, and it’s not clear what the public has got out of it. Perhaps things would be worse without the bailout but they’re certainly no better. Wall Street banks have not significantly stepped up their loans to small businesses, college students, car buyers, or distressed homeowners. Much of the auto industry is on the verge of bankruptcy. And the rate of foreclosures is rising.
What happened to all the money? About a third has gone into dividends the banks are paying their shareholders. Some of the rest into executive salaries and bonuses. Another portion toward acquisitions designed to raise share values. Another chunk for bailing out giant insurer, AIG.
That’s not what taxpayers bargained for. Paulson originally told Congress he’d use the money to buy mortgage-backed securities that were clogging the financial system. He’d create a market for them by holding a kind of reverse auction, buying them from the banks at the lowest prices they’d be willing to sell them for.
But Paulson has abandoned that strategy and is now just handing the money directly to the big banks, and AIG — all of which are using the money for their own purposes. It’s the worst type of trickle-down economics. Taxpayers are sending the money upward, and almost none of it is trickling back down.
What was it that the Soprano guy said? “Money goes up; shit comes down”.