It seems one thing the left (not liberal) and right (Ron Paul variety) can agree on are these bank bailouts are misplaced priorities. The bailouts are full of incentives and rewards to those that got us into this mess. In addition, bailouts propped up large banks who took way too many risks with taxpayer money , while the government simultaneously shut down median and small banks who were not “too big to fail”.
Tasini is the latest on the left to question Obama’s wisdom, or lack thereof, in continuing to bailout the banks.
I understand why the Administration had been working overtime to try to prop up major banks–but understanding does not mean agreement with the long-term strategy. In fact, the question worth asking today is not whether the stress tests are accurate or whether more taxpayer money will be needed to shore up the major banks. It is actually this: why are we not using this crisis to create a new banking system? via Let Insolvent Banks Fail To Make Way For A New System – Working Life.
As I mentioned yesterday the reason those hedge funds did not want to play ball with Chrysler was because of the belief they could be bailed out with Tarp funds. The Chrysler bankruptsy is the perfect example of moral hazzard. The hedge fund managers could avoid the economic consequences of the free market because of a goverment policy of bailing out the wrong doers.
What Tansini is hinting at is these bailouts are doing exactly the oppossite of what we should be doing policy wise. We should be propping up a system where banks are smaller, local, and accountable. These bailouts are doing the exact oppossite. Bank of America and these other banks today are much larger, global, and less accountable than before the bailouts.
ProleTech 