CARD Act

Your Shriveling 401(K): Thank Financial Red Tape and the Foreclosure Furor

by Hans Bader on October 19, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Regulation

If your 401(K) has shrunken recently, it may be due to falling bank stocks, like Bank of America stock, which has fallen from over $19 a share to less than $12 a share over the last six months.   Most 401(K)s indirectly own Bank of America stock, because its stock is held both by most large diversified mutual funds, and by most index funds.

Bank of America just reported a $7.3 billion loss due to $9.87 billion in costs resulting from the restrictions on debit cards contained in the 2010 Dodd-Frank Act backed by the Obama administration.  (Those restrictions will also result in sizeable costs being passed on to consumers, while benefiting certain politically-connected businesses.  Other provisions in the Dodd-Frank Act not only harm banks and the economy, but are resulting in the return of some checking account monthly fees and per-check fees, while another costly law called the CARD Act is leading to the return of annual fees on some credit cards.)

But Bank of America’s stock value has fallen more due to the recent furor over foreclosures and the possibility that paperwork errors and securitization may thwart foreclosures against defaulting mortgage borrowers.  Bank of America temporarily halted foreclosures in all fifty states.  Leading law professor Richard Epstein explains how a permanent halt to foreclosures would be a disaster for “prudent borrowers and lenders,” as “those purchasers who bought homes out of foreclosure proceedings may well be forced to defend their titles against the original borrowers who went into default.”  At AOL News, Marty Robins gives additional reasons why a halt to foreclosures is a bad idea that would delay “economic recovery,” wipe out bank capital, reduce their “lending capacity,” and increase “interest rates” on mortgages.  A Washington Post story illustrates the negative ripple effects on the economy and ordinary citizens of halting foreclosures.

Bank of America stock fell more than 4 percent today after the New York Fed and others threatened to sue Bank of America to force it to repurchase $47 billion in mortgage securities that soured.  (Earlier, the Fed pressured Bank of America into buying a collapsing Wall Street investment firm whose failure it perceived as threatening the economy.   And the New York Fed, then headed by Timothy Geithner, used the AIG bailout to make billions in unnecessary payments to politically-connected financial firms that didn’t even need the money. )

Earlier this month, perhaps to appease politicians, Bank of America suspended foreclosures in all 50 states after sloppy paperwork in some foreclosures became apparent.  Now, it’s trying to resume foreclosures in 23 states, after a review disclosed no examples of innocent homeowners being foreclosed upon by it.  But state attorneys general smell blood and are pressing the banks not to resume foreclosures at all.

Many Free Checking Accounts Disappearing Due to Dodd-Frank Financial “Reform” Law

by Hans Bader on September 22, 2010

in Economy, Legal, Politics as Usual, Regulation, Sanctimony, Zeitgeist

The so-called financial “reform” bill that passed Congress — the Dodd-Frank Act — is wiping out many free checking accounts, since many banks can’t afford its red tape unless they either charge a monthly fee, or require a minimum balance of well over $1,000.

Ted Frank’s bank is now charging him a $15 monthly fee and $0.50 per check on his formerly free checking account, thanks to the consumer “protection” red tape in the Dodd-Frank Act, which was recently signed into law by the president.

Earlier, the same thing happened with credit cards, where a law passed by Congress in 2009 had the effect of reviving annual fees and wiping out many cash-back and rewards programs.  Congress passed a law called the CARD Act of 2009 (Credit Card Accountability Responsibility and Disclosure Act) that resulted in some of my wife’s previously-free credit cards charging her an annual fee, or chopping her rebates on purchases (she canceled those cards, and used other cards instead; but some cardholders don’t have other cards without annual fees).  Many, but not all, credit cards have reinstated annual fees or canceled rebates and rewards programs thanks to the CARD Act.  The law effectively forces responsible people to subsidize irresponsible people.  Passed in the name of consumer protection, it actually ripped off many consumers.

Congress Destroys Free Checking Accounts by Blocking Overdraft Fees for the Irresponsible

by Hans Bader on June 17, 2010 · 10 comments

in Bailout Watch, Economy, Legal, Politics as Usual, Regulation, Sanctimony, Zeitgeist

Banks can afford to offer free checking accounts with no minimum balance, to responsible people, only because they can charge overdraft fees to irresponsible people.  But Congress has now prohibited many overdraft fees, which will result in many banks eliminating free checking, and also require responsible people to subsidize irresponsible people.  This is chronicled in a Wall Street Journal news story entitled “End Is Seen to Free Checking.”

As the Journal notes,  “Bank of America Corp. and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, in a push that is expected to spell an end to free checking accounts for many Americans. Free checking accounts, which have been widely available for more than a decade, have been a boon to middle-class consumers and attracted low-income customers to the banking system for the first time. Customers will likely be required to pay new monthly maintenance fees on the most basic accounts that don’t generate a lot of activity. To avoid a fee, customers will have to maintain certain account balances or frequently use other banking services, such as credit and debit cards, automated teller machines and online accounts. ‘If you put $1,000 in a checking account and don’t do anything with it, it will be hard to get that for free,’” thanks to the new rules.

This is becoming a pattern for Congress, passing laws forcing responsible people to subsidize irresponsible people.  It did the same thing with the bailouts, and with the CARD Act of 2009, which effectively forced responsible credit cardholders to subsidize irresponsible credit cardholders.  That credit card law, which limited what banks could charge irresponsible credit holders,  led to the return of annual fees on some credit cards, and wiped out many cash-back and rewards programs.

The elimination of free checking thanks to Congress’s unwise restrictions on overdraft fees will harm low-income people by driving them back to check-cashing stores that charge them money to cash every check. “The offers of free checking without any minimum balance requirements attracted a new wave of low-income customers, who previously went to check-cashing stores.”

Senate Passes Financial “Reform” Bill, 59-39; Will Wipe Out Jobs and Increase Credit Card Costs

by Hans Bader on May 21, 2010 · 2 comments

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, International, Legal, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

The Senate has just passed a 1,500 page financial “reform” bill that deliberately leaves unreformed the corrupt mortgage giants that spawned the financial crisis–while wiping out jobs and potentially driving up fees for many credit cardholders.

In a party-line vote, Senate Democrats earlier blocked any reform of Fannie Mae and Freddie Mac, the corrupt, government-sponsored mortgage giants that even Obama administration officials admit were at the “core” of “what went wrong” in the financial crisis.

(Obama received $125,000 in contributions from these mortgage giants as a Senator, second only to the corrupt Senator Chris Dodd, who is retiring this year due to his financial scandals, yet is the chief drafter of the financial “reform” bill.)

Business groups warn that the new rules will wipe out jobs and slow the economic recovery. “If you want to drive capital out of the United States, this is your bill,” said Thomas Donohue, president and CEO of the US Chamber of Commerce.

The bill also increases banks’ costs by restricting the ability of banks to enter into contracts charging retailers for the convenience of using credit or debit cards to collect payment from customers.  When Australia did this credit card holders suffered, as banks passed on the increased costs to them by hiking annual fees and getting rid of cash-back, rebate, and rewards programs.  (Ironically, recent interest rate hikes are partly the product of a law recently passed by Congress, the CARD Act, which forces responsible people to bear the costs of irresponsible borrowers.)

In the Wall Street Journal, Professor Todd Zywicki notes that such provisions harm consumers: “This is exactly what happened when Australian regulators imposed price controls on interchange fees in 2003: Annual fees increased an average of 22% on standard credit cards and annual fees for rewards cards increased by 47%-77%. Card issuers also reduced the generosity of their reward programs.”

The so-called financial “reform” bill would also give government officials the ability to nationalize businesses that they claim are at risk of failing — and block meaningful judicial review of such seizures by shareholders alleging violations of their constitutional rights.  (That will increase the ability of presidents to shake down businesses for donations to their political allies, since a business in danger of being seized by the government will try to curry favor with government officials.)  The bill’s House architect, Barney Frank, boasts that it will create “death panels” for American companies (this is the same Barney Frank who for years blocked any reform of the corrupt mortgage giants Fannie Mae and Freddie Mac).

Mortgage giant Fannie Mae is getting another $8.4 billion in federal bailout money, after the Obama administration earlier lifted a $400 billion limit on bailouts for Fannie Mae and Freddie Mac, two mortgage giants known as the Government-Sponsored Enterprises (GSEs).  The other GSE, Freddie Mac, is getting $10.6 billion more in bailouts.  Soon, they will be receiving much more: “Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie,” reports the New York Times.

At the direction of the Obama administration, Freddie Mac ran up more than $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes.  Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.)  By contrast, the Republican alternative, rejected by the Senate, aimed “to wind down, and break up” the mortgage giants and “limit taxpayer exposure” to their losses.

The Obama Administration showered the mortgage giants’ executives with $42 million in compensation.

Fannie and Freddie helped spawn the mortgage crisis by acting as loan toilets, buying up risky mortgages and thus creating an artificial market for junk.  “From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.”  They paid their CEOs millions, and engaged in massive accounting fraud — $6.3 billion at Fannie Mae alone — to increase the size of their managers’ bonuses.  As Government-Sponsored Enterprises, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

Banking expert Peter Wallison, who warned for years about the risky practices of Fannie and Freddie, said the financial “reform” bill would lead to “bailouts forever,” contrary to Obama’s claims.

Government pressure on banks to make loans in economically-depressed neighborhoods was a major cause of the mortgage crisis.  That pressure will increase under the financial “reform” legislation.  Legislators approved Obama’s proposal to create a new consumer “protection” agency.  But it may harm rather than help consumers.  Why?  “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.”  It would do so without regard for banks’ financial safety and soundness, even though the Community Reinvestment Act was a key contributor to the financial crisis.

Obama Administration Rewards Corrupt Mortgage Giants, Punishes Productive Private Banks, Fleeces Taxpayers and Responsible Credit Cardholders

by Hans Bader on March 10, 2010 · 3 comments

in Bailout Watch, Deregulate to Stimulate, Economy, Energy, Environment, Labor, Mobility, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The Obama administration wants to increase taxes on productive banks that are self-supporting, while exempting the mortgage giants and other companies that got massive taxpayer bailouts.  For more details, click on this graph, “Bank-robbing tax lets ‘bad guys’ go free,” courtesy of a Washington think-tank, the Heritage Foundation.  It shows that the mortgage giants Fannie Mae and Freddie Mac are exempt and will never have to pay a dime, despite being bailed out by taxpayers at a cost of more than $200 billion, while Bank of America and Wells Fargo, which are solvent and returned all their TARP money, would be forced to pay billions under the administration’s proposed tax.

General Motors and Chrysler won’t have to pay a dime, either, even though the government claimed they were “financial institutions” just like banks in order to use bank bailout money to bail them out at a cost of at least $70 billion (a bailout that would not even have been needed to save the companies if they had simply been reformed to make them competitive, and received relief from burdensome red tape, like poorly-drafted CAFE and global-warming regulations that may backfire.  Instead, the Obama administration effectively gave the companies, at taxpayer expense, to the UAW, a powerful union opposed to much-needed reforms).

In other news, economists and real estate experts say that a mortgage bailout program the Obama administration spent $75 billion on has backfired and harmed the real estate market.

Obama recently expanded the bailout of mortgage giants Fannie Mae and Freddie Mac and lavished money ($42 million) on their CEOs.

Under the Bush administration, federal regulators took over Fannie and Freddie in the name of stopping their risky practices. But the Obama administration has increased their purchases of risky mortgages in a vain attempt to inflate the economy. Worse, it forced them to run up to tens of billions in losses to bail out deadbeat and at-risk mortgage borrowers, and then tried to conceal those losses, in conduct reminiscent of Enron.  But their management hasn’t objected, because the costly requirements are accompanied by massive taxpayer bailouts and lavish pay for the mortgage giants’ CEOs.

Fannie and Freddie helped spawn the mortgage crisis by acting as loan toilets, buying up risky mortgages and thus creating an artificial market for junk.  “From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.”

Why did they buy these risky loans?  They put up with Clinton-era affordable-housing regulations that required them to buy up lots of risky loans, in order to curry favor on Capitol Hill and thus retain their annual $10 billion in tax and other special privileges (which they possessed owing to their status as “Government-Sponsored Enterprises” or GSEs). They paid their CEOs millions in the process, and engaged in massive accounting fraud — $6.3 billion at Fannie Mae alone — to increase the size of their managers’ bonuses.  As GSEs, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

At the direction of the Obama administration, Freddie Mac is now running up $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes.  Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.

Under Obama’s proposed financial “reforms,” banks will be pressured to make even more risky, low-income loans. Obama has sent to Congress his proposal to create a politically correct entity called the Consumer Financial Protection Agency, tasked with enforcing the Community Reinvestment Act. Government pressure on banks to make low-income loans was a key reason for the mortgage meltdown and the financial crisis. Yet Obama’s proposals would empower the new agency to enforce the Community Reinvestment Act, which was a key contributor to the financial crisis, without regard for banks’ financial safety and soundness.

Moreover, Obama’s proposed financial rules do absolutely nothing to reform Fannie Mae and Freddie Mac, admits Treasury Secretary Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

Meanwhile, a new law backed by the Obama administration, the CARD Act of 2009, has effectively forced responsible credit-cardholders to subsidize irresponsible people, leading to the return of annual fees on many credit cards, and the elimination of many cash-back and rewards programs.  My wife, who has an excellent credit rating, was recently informed that one of her cards will now have an annual fee — of $60!  (She promptly canceled the card.)

Credit CARD Act penalizes thrift and entrepreneurship; interchange fee controls would compound harm to consumers

by John Berlau on February 22, 2010 · 1 comment

in Bailout Watch, Deregulate to Stimulate, Economy, Insurance, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

Today, the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 goes into effect. While the law, passed last May, is being hailed as a boon for consumers, it’s already causing a slew of unintended consequences.

Congress should carefully consider how the CARD Act will harm consumers and entrepreneurs and revise the law’s flawed provisions. Furthermore, Congress should resist populist proposals that would further distort the credit card market, such as interest rate caps or price controls on payment card interchange fees.

The CARD Act will make it harder for consumers to get credit just as policymakers are trying to get credit flowing. Ironically, the bill will result in higher interest rates for many cardholders, because it limits the ability of banks to properly price the risks associated with cardholders who make late payments. Even responsible credit cardholders who pay off their bills at the end of each month may suffer as banks increase annual fees and cut back on rewards programs to make up for lost revenue stemming from the law. The New York Times speculated last May that the law might create “a penalty for thrift.” CARD Act proponents claim the bill will make credit card marketing more transparent to consumers. Unfortunately, however, the so-called “Credit Card Holder Bill of Rights” goes beyond disclosure rules and imposes paternalistic rules that limit consumer choice and undermine sound risk-based pricing practices that have long been relied upon by credit card-issuing banks and credit unions.

The CARD Act imposes discriminatory restrictions on adults younger than 21 who wish to obtain credit cards. The law prevents low-income young adults – even those who can vote and be drafted into the military – from getting a credit card without the cosigning of a parent or guardian. This purely age-based restriction on credit card eligibility undermines the ability of college students and other young adults to establish good credit and learn how to manage credit wisely. Worse, by cutting off students’ access to credit, the CARD Act may pressure college students to work more hours and compromise on their studies.

Members of Congress wrongly moved up the date of the law’s implementation. Whenever new regulations are codified, firms need a reasonable amount time to adjust their pricing mechanisms to the changes. The Federal Reserve rules that the CARD Act codifies were originally set by the agency to go into effect July 1, 2010. But Congress moved up that date to today. As a result, firms are scrambling to meet these shifting deadlines, and more card holders have had their accounts closed and credit limits reduced than likely otherwise would have. The law also codifies the Federal Reserve’s unwise decision to ban the so-called “universal default.” A universal default occurs when a credit card issuer raises rates on a cardholder who defaults on a different credit card or loan. This is a sensible risk management practice that enables banks to properly gauge the risks associated with cardholders with weakened credit profiles.

Stifling the payment card industry with federal regulation won’t just hurt consumers, it will stifle entrepreneurship, too. Start-ups often have limited collateral, making credit cards one of the only sources of financing for getting off the ground. The Kauffman Foundation has found that almost half of all small businesses rely on personal credit cards for financing. One such entrepreneur is Sergey Brin, who used his personal credit cards as a college student in the 1990s to start the company that today is known as Google.

Fortunately for consumers, Congressional leaders wisely rejected calls from the retailers’ lobby to impose price controls on payment card interchange fees. Instead, Congress ordered the Government Accountability Office to conduct a study of interchange fees. In November, the GAO issued its report, telling Congress what many economists and other researchers have been saying for years: that interchange fee controls amount to a massive subsidy for some of the nation’s biggest retailers at the expense of consumers and the community banks and credit unions that issue credit cards. As the GAO report pointed out, when Australia capped interchange fees, consumers suffered from higher cardholder fees with no corresponding decrease in prices! (For more on interchange fees, see my Issue Analysis, Payment Card Networks Under Assault, with Ryan Radia.)

Congress Mulls More Credit Card Restrictions, in Legislation Likely to Backfire on Consumers

by Hans Bader on January 5, 2010 · 3 comments

in Deregulate to Stimulate, Economy, Legal, Politics as Usual, Precaution & Risk, Sanctimony

Some in Congress want to impose interest rate ceilings on credit cards and restrictions on interchange fees.  Australia tried the same thing, and it backfired, harming consumers by forcing credit card companies to increase annual fees on responsible credit cardholders and scale back rewards programs.  (Ironically, recent interest rate hikes are partly the product of a law recently passed by Congress, the CARD Act, which forces responsible people to bear the costs of irresponsible borrowers.)

As law professor Todd Zywicki notes in the Wall Street Journal, the proposed legislation would harm both consumers and small businesses, since it would

reduce the quantity and quality of credit cards by restricting credit availability and cutting back on product innovation or ancillary card benefits. This is exactly what happened when Australian regulators imposed price controls on interchange fees in 2003: Annual fees increased an average of 22% on standard credit cards and annual fees for rewards cards increased by 47%-77%. Card issuers also reduced the generosity of their reward programs by 23%. Innovation, especially in terms of improved security and identity-theft protection, was stalled. Card issuers also increased their efforts to attract higher-risk customers who generate interest and penalty fees to offset lower interchange revenues from lower-risk transactional users.  The most important pro-consumer innovation in payment systems of the past two decades has been the general disappearance of annual fees on most credit cards. Cardholders now carry and use multiple cards at little or no cost. The consequences for consumer choice and competition have been profound—card issuers compete for consumer business literally every time they open their wallet to make a purchase.  Annual fees are essentially a tax on card-holding. Policies that produced a return of annual fees would strangle this process of competition by making it more expensive for consumers to hold multiple cards and to switch cards easily. Small businesses, three-quarters of which rely on credit cards, would also have to pay more to maintain access to multiple credit lines, stifling the most potent engine of economic recovery.

Earlier, Congress and the President misguidedly attempted to reduce burdens on irresponsible credit card borrowers, through a new law, the CARD Act of 2009 (Credit Card Accountability Responsibility and Disclosure Act), that backfired and resulted in the return of annual fees, bizarre interest rate hikes for some responsible borrowers, and the elimination of many cash back and rewards programs.

All these bailouts are taking their toll on the economy.  Economists and real estate experts say a $75 billion mortgage bailout program devised by the Obama administration is actually harming the economy, the housing market, and the construction industry.

Obama’s Recent $75 Billion Mortgage Bailout Fails: Harmful to Economy, Housing, and Construction, Say Economists and Real Estate Experts

by Hans Bader on January 4, 2010 · 2 comments

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Politics as Usual, Regulation

Economists and real estate experts are saying that a $75 billion mortgage bailout program designed by the Obama administration has backfired and harmed the housing market, reports The New York Times:

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good. . .experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

That “’has the effect of lengthening the crisis,’ said Kevin Katari, managing member of Watershed Asset Management. . . ’We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway,’ and ‘banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books,’” delaying a recovery in the housing market and the construction industry.

The failed mortgage bailout is reminiscent of the government’s attempt to reduce burdens on irresponsible credit card borrowers, through a new law, the CARD Act of 2009, that backfired and resulted in the return of annual fees, bizarre interest rate hikes for some responsible borrowers, and the elimination of many cash back and rewards programs.

Earlier, the government pushed through billions more in other mortgage bailouts, to bail out even reckless high-income borrowers, and forced financial institutions the government took over in the name of fiscal responsibility, like Freddie Mac, to run up billions in losses bailing out irresponsible borrowers.

Banks will now be pressured to make even more risky loans. The House has approved Obama’s proposal to create the so-called Consumer Financial Protection Agency. Government pressure on banks to make loans in economically-depressed neighborhoods was a key reason for the mortgage meltdown and the financial crisis. Yet Obama’s disturbing proposal would empower the new agency to enforce the Community Reinvestment Act without regard for banks’ financial safety and soundness.  The Community Reinvestment Act was a key contributor to the financial crisis.

The mortgage crisis was also caused by the reckless government-sponsored mortgage giants Fannie Mae and Freddie Mac, and by federal affordable-housing mandates. But Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, tax cheat Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

Worse, the Obama Administration lifted the $400 billion limit on bailouts for Fannie and Freddie, so that they could continue to buy up junky mortgages at taxpayer expense, and showered their executives with $42 million in compensation.

Obama’s financial-regulation plan is “largely the product of extensive conversations” with two lawmakers responsible for the corrupt status quo, Chris Dodd and Barney Frank, and it expands the reach of regulations that have been used by left-wing groups to extort pay-offs from banks.

Bank of America to Impose Annual Fees on Some Credit Cardholders, Thanks to New Credit Card Law

by Hans Bader on October 20, 2009 · 1 comment

in Bailout Watch, Legal, Politics as Usual, Sanctimony

Bank of America recently announced that it will impose annual fees on some of its cardholders.  This is in response to the CARD Act (Credit Card Accountability Responsibility and Disclosure Act of 2009), which effectively shifts costs to responsible people from irresponsible people, forcing banks to increase charges to responsible credit card holders.

The CARD Act has also wiped out many cash-back and rewards programs and rebates on credit cards, something earlier chronicled here.  Despite that fact, its passage was trumpeted by President Obama and liberal congressional leaders, who are engaging in a form of class warfare against financially responsible people.

Earlier, the government pushed through $250 billion in mortgage bailouts, to bail out even reckless high-income borrowers, and forced financial institutions the government took over in the name of fiscal responsibility, like Freddie Mac, to run up billions in losses bailing out irresponsible borrowers.  It also pushed through $70 billion in auto bailouts to enrich the United Auto Workers union, bailouts that ripped off taxpayers and pension funds and illegally diverted funds from the bank bailout to an auto bailout.  (The bailouts would not even have been necessary if the companies had obtained regulatory relief and greater wage concessions, and may not even succeed, requiring billions more in taxpayer dollars by 2010.)

In today’s Washington Post, Allan Sloan writes about how the government has deliberately ripped off responsible people to bail out irresponsible people over the last year, by spending trillions of dollars to force down interest rates.  That has resulted in extremely low interest rates on savings accounts and bonds, while also, to a lesser extent, reducing interest rates paid by irresponsible borrowers, despite their rising default rates.