Bailout Bill Drafted by Senator Dodd Is a Scam on Taxpayers to Bankroll Left-Wing Extremists

by Hans Bader on September 26, 2008 · 10 comments

in Bailout Watch, Economy, Legal, Politics as Usual, Precaution & Risk

The $700 billion bailout of the financial system just got worse, thanks to a rewrite by Senate banking committee chairman Chris Dodd.  If the government loses money on all the “bad debt” it’s buying, the taxpayers will pick up 100% of the tab.  But if markets rebound, or the government makes money on any of its individual purchases, taxpayers won’t keep the money.  Instead, at least 20 percent of it will go into a housing slush fund that will benefit the left-wing group ACORN, which pressured lenders to make the risky sub-prime mortgage loans that spawned the mortgage crisis.  (Even though housing subsidies and mandates caused the mortgage bubble in the first place).

ACORN practices widespread voter fraud to increase liberal turnout in elections, and is guilty of financial fraud and embezzlement, but it has avoided any punishment due to its links to liberal lawmakers like Senator Chris Dodd, Congressman Barney Frank, and Senator Charles Schumer.  ACORN is engaged in massive fraud in battleground states like Florida.  (Election rules are being shredded for partisan purposes in other battleground states like Virginia and Ohio).

Other welfare has been added to the bailout to appease liberal lawmakers — the very lawmakers who blocked any reform of the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, which encouraged the risky lending that spawned the financial crisis (Fannie Mae engaged in extensive accounting fraud to benefit its crooked former executives.  Yet they remain influential liberal powerbrokers).

Even in its original form, the bailout was inflationary and unconstitutional, and created the risk of future bubbles.  It blindly ignored less costly alternatives and reforms of burdensome regulations that would reduce the need for a bailout.  It gave officials $700 billion to buy up bad loans, even though government incompetence and regulations (like affordable housing mandates) spawned the mortgage crisis.  Many economists oppose the proposed bailout, as Senator Shelby noted.

The banking system is shaky, but it would have been even worse if Congress had not modernized banking laws by repealing regulations that artificially restricted bank diversification in 1999, as banking expert Peter Wallison and Columbia Business School’s Charles Calomiris have noted.

Jeff September 26, 2008 at 4:43 am

I think it's worse than you portray, at least in the draft, which said:"Not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).(2) USE OF DEPOSITS.—Of the amount referred to in paragraph (1)— (A) 65 percent shall be deposited into the Housing Trust Fund .. (B) 35 percent shall be deposited into theCapital Magnet Fund …"This appears to consider the sale of each individual asset by itself and takes money from those that might be profitable as opposed to considering the profitability, or rather more realistically, the loss to taxpayers on the assets as a whole. Just as Wall Street wants to privatize their profits while shifting the cost of their bad bets to taxpayers, the Democrats want to give any profits from any individual assets to their radical leftist buddies while sticking taxpayers with all the losses.

Bunce September 28, 2008 at 6:43 am

Where is our Justice Department? Grand Jury? FBI?Is it really possible that these arrogant twits can so openly engage in graft and corruption with impunity?

bruce September 28, 2008 at 7:56 am

cris dodd has always been a crook who has tried to ruin america and anything he proposes will be wrong.dodd,schumer,frank and the whole democratic party caused this mess does anyone think they would have a solution that did not make it worse?i hope we have enough real republicans to block democrats=progressives=commies from fleecing us ounce again.

henry sherman December 5, 2008 at 6:14 am

Why isn't cerberus at the request for TARP funds THey own chrysler .They made a bad investment and should finance chrysler or sell it..

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