Bailing out the bailout (U.S. is going down while the “shameful” still get richer)

The Obama administration has opened a new chapter in its programme to support the US banking and financial industry, stepping up the injection of government cash with a total package that could ultimately top $1trn.

The move follows an increasingly controversial $700bn assistance plan approved last October under the previous administration of George Bush.

The new three-part programme, unveiled on Tuesday, is aimed at jump-starting the faltering credit market that has helped plunge the world’s largest economy into its biggest recession in 70 years.

Wall Street traders have come under
increasing scrutiny [EPA]
The Federal Reserve, the US central bank, will take part in backing new credit that, in turn, will target loans and other credit assistance for consumers, homeowners, small businesses and commercial real estate projects, said Timothy Geithner, Obama’s treasury secretary, as he announced the new plan.

Geithner also laid out the ground work for the establishing a fund of $500bn to remove bad mortgage loans held by the country’s banks and in financial markets.

But so far, government spending to repair widespread credit problems in the nation’s banking industry has met mixed reactions.

The Bush administration’s policy of shielding banks from public disclosure and how the money was being spent spurred widespread public scepticism and critics now complain that that the original $700bn program may have been misused and ineffective.

Adding to public concerns was the speed with which the US congress approved such huge spending on a package equal to the size of the national economies of the Netherlands or Turkey.

“After a week of debating, they put this thing out, it was 400-pages long and there was no transparency,” David Williams of Citizens against Government Waste told Al Jazeera.

“No accountability, nothing was attached to this bill to make sure the tax payer could see where this money was being spent.”

Lawrence Mitchell, a law professor and author of The Speculation Economy, says the entire process was ill-conceived because the present economic troubles were years in the making as Washington pressed for more and more deregulation of its banking sectors.

“Figuring out legislation is complex figuring out where the holes are,” Mitchell told Al Jazeera.

“You can’t draft legislation that quickly. Just as you had panic in the financial markets, you had panic bailouts in the governmental arena.”

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One Response

  1. The stage is quickly getting set for the new world order.. I can only hope they don’t succeed

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