Apr 05 2009
Wow, we are seeing some major fireworks in Washington DC this evening. The government official responsible for overseeing the TARP funds and their use in bailing out troubled companies is laying into one and all today:
Elizabeth Warren, chief watchdog of America’s $700bn (Â£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration’s approach to saving the financial system from collapse.
She’s not just going after the failed fat cats, but has her sites on the inexperienced Team Obama:
Warren also believes there are “dangers inherent” in the approach taken by treasury secretary Tim Geithner, who she says has offered “open-ended subsidies” to some of the world’s biggest financial institutions without adequately weighing potential pitfalls. “We want to ensure that the treasury gives the public an alternative approach,” she said, adding that she was worried that banks would not recover while they were being fed subsidies. “When are they going to say, enough?” she said.
The massive programs designed to rescue the nation’s financial sector are operating without adequate oversight, with vague goals and limited disclosure of their details to the taxpayers who are paying for them, government watchdogs told a Senate panel Tuesday.
But “without a clearer explanation” about parts of the program, “it is not possible to exercise meaningful oversight over Treasury’s actions,” said Elizabeth Warren, a Harvard Law School professor who leads a special congressional oversight panel monitoring the TARP program. Her comments came in a Senate Finance Committee hearing on the bailout program.
Congress just took a major shot at the executive branch (or will take one, to be precise). Given the fact both branches are in Democrat hands means something is percolating below the surface.
One thing which will catch on with average, struggling Americans is how Ms. Warren is calling for investors to get their just rewards and end the raid on the treasury to fill their filthy-rich pockets with our tax dollars. As one commenter put it (very well):
I also think that bondholders need to take a haircut as well, not just shareholders, though they may not need to be wiped out in all cases. However, if the value of a company if it was liquidated is less than zero, then yes, non-secured bondholders (those whose bonds aren’t attached to specific assets with value) should be wiped out.
This will be a very interesting week ahead.