I was originally against the $700 billion bailout because of a profound lack of trust in the Bush Administration. I regret to say I was right.
The two major objections I had were that the real costs of the bailout would be hidden and that while asking for new powers the Bush Administration would hide political power grabs. Here’s one example, likely of many, that covers both (h/t Matt):
“The financial world was fixated on Capitol Hill as Congress battled over the Bush administration’s request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.
But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.
The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.
‘Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no,’ said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. ‘They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks.’”
You have to ask ‘how could this happen in the midst of an economic catastrophe?’ You have to answer, ‘the Bush Administration.’ Unfortunately it’s par for the course. It’s why I suggested that we had to wait for a new Treasury Secretary before a big bailout. When this Administration helps the majority of Americans it’s too often incidental, or accidental.