Bailout Accounting

The Treasury Department paid out over $8 million in questionable legal fees to four law firms for providing advice on the government’s controversial bank bailout in 2008 at the height of the financial crisis, says a new watchdog report released Thursday.

“The fee bills contained either no descriptions or vague descriptions of work performed, block billing, unsupported expense charges, and administrative charges that were not allowed under the contract,” said the Office of the Special Inspector General for the Troubled Asset Relief Program, known as SIGTARP, in a report to Congress.

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The report asked that Treasury should determine the “allowability” of about $8 million in “unsupported” legal fees paid to Simpson Thacher & Bartlett LLP, Cadwalader Wickersham & Taft LLP, Locke Lord Bissell & Liddell LLP and Bingham McCutchen LLP.

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Treasury Department spokesman Mark Paustenbach defended the fees, noting that the services were “of high quality and critical to the success of our programs.”

Market Watch

Shall we look at that success?

We all know about TARP, the Troubled Asset Relief Program, which spent $700 billion in taxpayers’ money to bail out banks after the financial crisis. That money was scrutinized by Congress and the media. But it turns out that that $700 billion is just a small part of a much larger pool of money that has gone into propping up our nation’s financial system. And most of that taxpayer money hasn’t had much public scrutiny at all. According to a team at Bloomberg News, at one point last year the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy.

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According to the U.S. Treasury's own figures, available publicly [...], as of TODAY, taxpayers are still more than $95 BILLION IN THE RED on TARP. And that's including all interest and other income. There is still $122 BILLION of TARP funds that have NOT yet been paid back.

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AIG, alone, still owes over $50 BILLION.

Daily Bail

Pro Publica is keeping track:

We're tracking where taxpayer money has gone in the ongoing bailout of the financial system. Our database accounts for both the broader $700 billion bill and the separate bailout of Fannie Mae and Freddie Mac (go here for the Federal Reserve’s emergency loans to banks).

Much more info is available on their site.

The White House has denied pressuring Ford to pull its ad that criticizes competitors that took and have yet to repay taxpayer dollars from the Troubled Asset Relief Program. However, the Obama administration can’t deny a new gift it showers on General Motors and Chrysler in its package of tax hikes to pay for its so-called American Jobs Act.

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In doublespeak that would make even George Orwell do a doubletake, President Obama’s “financial crisis responsibility fee” would tax banks, insurance companies and brokerage houses that have paid back their bailout money — and even some firms that never took a bailout — to pay the tab of irresponsible firms, namely the auto companies that still owe the government billions.

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“Although many of the largest financial firms have repaid the Treasury for their TARP assistance, they continue to implicitly benefit from the TARP funds that bolstered their balance sheets during a period of great economic upheaval,” the administration states. A fee of an unspecified amount “will be restricted to financial firms with assets over $50 billion and will be imposed until all TARP costs have been recouped.”

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Let’s first examine the term “financial firm.” The Obama plan never exactly defines it, but appears narrow enough to exclude auto companies. Fannie and Freddie would also almost certainly be excluded, since they are now officially part of the government, and hence not private “financial firms.”

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The White House “wants to make the nation’s largest banks pay for the losses incurred in the $85 billion auto bailout,” reports the Detroit News.

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What this really means is that ordinary Americans [...] will pay for the auto bailouts twice. Once through their tax dollars, and again when their banks and insurance companies pass on the cost of the “responsibility fee” through higher borrowing costs, higher policy premiums, and lower returns on savings and investment. For we know from the experience of the Dodd-Frank debit card price controls that when government imposes costs on business, those costs are inevitably passed on to consumers.

Big Government

So, yeah, occupy Wall Street.

....but hey, do what you want....you will anyway.