Paulson yells mulligan to Congress.
The New York Times demands a two stroke penalty on TARP (The Act Rewarding Plutocrats). Gretchen Morgenson reports:
While the government still declines to say exactly how it has spent your funds, or who all the beneficiaries are, Mr. Paulson conceded that his huge capital injection hasn’t persuaded banks to lend more money.
Michael Lewis has some more tips before Paulson tees off on the next round of disbursement.
- Embrace rent-seeking. The main qualification for assistance is past incompetence. Instead, give the bailout money to friends, family and struggling authors. So they’re not bankers, you protest. But they haven’t yet been given a chance to prove their financial idiocy. Once they fail, they’ll then have just as much experience as current bankers. GM, Ford and Chrysler have completely mis-framed their appeal for a bailout. Who says they have to make cars? Why not turn the big three into the big lending tree?
- At least give the money away to people who won’t present themselves as obstacles to innovation. Sez Lewis, “By giving money to bankers who have made many stupid loans you have made life harder for bankers who have never made stupid loans. By aiding the dumb banks you prevent the smart ones from replacing them.”
In his latest column, his wit shines once more:
If you haven’t figured it out by now, America has hired the wrong Paulson. There are two of them, Hank and John. Hank turned Goldman Sachs from an investment bank into a busload of tourists going to a casino, with borrowed money.
Goldman might have been the smartest investment bank but you only needed to see Dick Fuld testify before a congressional committee to know how much that means. No pun intended, but Dick didn’t know dick.
Astute observers will note that every time they run across a party of midgets, one is tallest, and his name is usually Goldman. Suffice it to say that while Hank’s shop was creating subprime mortgage-backed bonds, John’s was shorting them. Hank wound up working for the government, John wound up making $3.7 billion. For himself.
Wake up America! The teacher has just asked the class to send one member to the chalk board to figure out a problem. You just reached past the A student in the front row and plucked the guy in the middle who’s working hard for a B-minus. And he’s confused!
Lewis also alerts me to this beauty of a letter written by Andrew Lahde. After running the table this year shorting banks–his hedge fund reports earnings over 800 percent–Lahde decided to retire in his prime. The best excerpt of his resignation letter:
I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
Or as Arnold Kling would put it, it sounds like some geeks made some money off the suits.