TimmyG Changes His Mind, Sort Of

We tax all the others and pass the revenue on to you

Fox Business today tells us that TimmyG has re-thought the whole bail-out thing. Bailouts should only be offered to solvent firms and only as a last resort, he says now. Yep. He told Congress today that it turns out that loaning money to people who can't pay it back isn't a good idea. He says in part:

"Any firm that puts itself in a position where it cannot survive without special assistance from the government must face the consequences of failure"

He also testified that

"We cannot put taxpayers in the position of paying for the losses of large private financial institutions" and "the government did not want to provide a false impression that such firms would be protected from failure by the government in times of stress."

Didn't we already know that? Sure we did, but there must be an exception when the borrowers are Timmy's friends and the lender is his old employer and it's lending under his direction. Try searching for TIMMYG in this blog and see what we have written so many times.

TimmyG is the man who directed the $350 bil Wall St. bailout to firms that were under his direction when he was the director of the NY Federal Reserve. He okayed or ignored the massive AIG bailout and its compensation and bonus plans, supervised bank bailouts, auto industry nationalization and so much more. Remember, he has never had a private sector job that didn't involve consulting the government on financial issues. Based on that was been given authority over America's private business sector, even including the power to control wages of non-bail-out companies.

Now he tells us that his earlier ideas were, well, bad. That train has left the station, Tim.

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Remember Cash-for-Clunkers? Sure you do. Cost us $3 bil and ran out in a few days instead of the planned three months. That one.

Edmonds.com, the car people, reports today that CfC accounted for 125,000 new car sales. Simple math, each new car sold cost American taxpayers $24,000. Average cost of the new cars, net of rebates? $25,248. Do you remember that the ONLY goal of CfC was to reduce carbon emissions? Finally, do you remember that I suggested we would be better off if the administration just gave $4k to anyone who turned in a clunker and let them buy a new car only if that fit into their plans? Simple math again, that would have cost us $500 mil instead of $3 bil and resulted in the same carbon reductions.

Some fraction of the attributable new car sales would have been lost, sure, but how much do you really care? $2.5 bil worth? Only if you owned a couple of car companies. Which you do, of course.

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Sort-of-unrelated note: Consumer Reports reports yet again that Chrysler products have the lowest reliability rating of any brand tested. 42% of GM models exceeded the reliability norm, 58% didn't. Didn't we know in our hearts that Ford, if the government would just stay out of their way, would exceed quality expectations? We did and Ford did.

Do you remember that Chrysler's merger with Fiat was supposed to result in world-class quality? Fiat got 35% of Chrysler... for free. Fiat is still so unreliable that they can't be sold in America. Good luck with that merger, Chrysler. Good luck with your 401(k)s, America.

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Say, did I mention that our car czar doesn't have any auto industry experience? No finance industry experience either. Nevertheless, US News and World Report tells us that we're about to slip GMAC another $5.6 bil. No, really. A minor disclaimer: GM only owns 49% of GMAC these days, but I digress. Here's some of the text:

The Detroit News reports, "The Treasury Department plans to inject up to $5.6 billion in new capital in GMAC -- the latest effort to help the auto finance giant, a government official confirmed late Tuesday." The government will accept preferred shares of stock in return. "The new government infusion would be on top of $12.5 billion in government support extended since December."

So why is this important? Allow me to repeat my first couple of paragraphs regarding TimmyG's testimony to congress TODAY:

"Any firm that puts itself in a position where it cannot survive without special assistance from the government must face the consequences of failure"

He also testified that "We cannot put taxpayers in the position of paying for the losses of large private financial institutions" and "the government did not want to provide a false impression that such firms would be protected from failure by the government in times of stress."

It is impossible for me to reconcile the two reports. Maybe you can.

That flushing sound is your money.

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