Does this seem unfair to you? Congress gave a huge amount of money to Wall Street with little oversight, but wants to micromanage the Big Three for much less?
The CEOs of the Big Three are prostrating themselves in front of Congress this week, confessing their sins, and begging for funds to stave off bankruptcy.
What they’re asking for is small, compared to the $700 billion bailout of Wall Street – only about 5% of that amount.
So why is Congress demanding so much in return? In addition to humiliating the Big Three leaders in a most public way, Congress insists on a lot of information: How exactly are the automakers going to use the borrowed money? How are they going to fix their problems?
These would seem like reasonable questions if it weren’t for the comparison with the Big Bailout: Congress demanded relatively little information considering that far larger amount of money at risk. And, we learned this week that the Bush Administration has not provided adequate oversight of the Wall Street bailout, according to a report just issued by the by the US Government Accountability Office (GAO). The report also says that necessary safeguards are not in place, and there’s no way of knowing if the bailout achieves its goals.
Even more alarming – the Federal Reserve doesn’t want to monitor how an individual bank uses the bailout money! The GAO report says the Fed prefers to measure success by the bailout’s general impact on the economy.
Compare all that with Congress’s micromanagement of the auto industry restructuring.
Why the double standard?
How do you make sense of how Congress is handling the two bailout situations? Are you as alarmed as I am?
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