Saturday, January 10, 2009

Legislative Bailout Sale

Here I thought it would be difficult to care any more about President Doofus and his inept administration. But this bailout business is really getting annoying.  The Treasury Department  maintains that it simply doesn’t know where the bailout banks have spent the money we the people have given them, or lent them. We’re talking a few hundred billion dollars, people.  That’s real money.

And why don’t they know? Well, apparently, they neglected to ask, and the banks aren’t talking. In part, the banks claim they don’t know where the money went. They don’t know?? I’m no financial expert, but isn’t that why they invented accounting systems? At least in theory, according to the rules of the game as I last left it when I worked at one of the Big 8 accounting firms, we developed things called accounting systems to track every last penny a company brought in and sent out—every penny.

And, guess what; we invented audit trails, and auditing systems to find all the money companies moved about during each and every year. Companies actually pay auditing firms to come in, examine their accounting systems and certify where all the money went.  So, now the banks are telling us that they either, don’t know, or won’t tell where the money went. Well, on first principles, we really need to tell the banks that they have two choices: 1) tell us exactly, precisely, to the penny, where they spent the money we gave/lent them; or 2) they will receive zero dollars going forward—that’s zero, as in none. Also, we should begin to call in the money. If they can’t repay, maybe they need to go bankrupt after all.

But this issue raises another point about our inept Congress-both branches apparently.  Normally, when Congress legislates something—a solution to some stated problem—what they do is to agree that there really is a problem out there that needs a solution, and that the solution is unlikely to emerge from our glorious and highly efficient and effective private sector.

So, after agreeing that a problem exists, somebody in Congress (a lobbyist mainly) invents a solution requiring Congress to appropriate money to the cause. Key to all this legislating business is that Congress agrees on a mechanism, an institution of some type that will receive the money. Then they agree, and express in the legislation and accompanying regulations, how the money will be spent.  Rarely, perhaps almost never, do they express the ultimate purposes of this legislative largesse in terms that are measurable.

Then they walk away, and wash their hands of that problem. On to the next problem.

Every couple of years, Congress revisits this issue. They call hearings, receive testimony regarding the continued existence of the problem and the continued need for the money. Then they change the subject. Again, on to the next problem.

So, what did they do in this Bank Bailout issue? Well, the Doofus Administration apparently got Congress to agree on a huge problem—that the entire financial system of the world was going to fail unless they ponied up a vast sum of money. Then they got Congress to agree not to ask any tough questions, i.e., they neglected to do the one thing Congress always does—to agree on how the Federal money would be spent.  Apparently, they all agreed on a general purpose—something big, like, “save the world” and then they agreed to give Doofus & Co total authority on how to spend the money. And the Doofus Administration of course, being total idiots, neglected to ask any questions when they gave away the store. “Oh please Mr. Banker. Take our money.”

So, Mr. President-Elect,  I am hoping that one of the things you will try to do is to give to Congress in each and every piece of legislation you produce a clear statement, cast in understandable and measurable terms, of both the means and intended ends of the legislation.  If you can’t do that, then I guarantee that the money you authorize will be pissed away . . . again and again.

So, try guys, try. We know that Congress is generally inept.

It’s up to you, Mr. President-elect. Don’t fail us.

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