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Lobbyists Swarm the Treasury for Piece of Bailout Pie
Key Excerpts from Article on Website of New York Times
Posted: November 14th, 2008
http://www.nytimes.com/2008/11/12/business/economy/12lobbyin...
When the government said it would spend $700 billion to rescue the nations financial industry, it seemed to be an ocean of money. But after one of the biggest lobbying free-for-alls in memory, it suddenly looks like a dwindling pool. Many new supplicants are lining up for an infusion of capital as billions of dollars are channeled to other beneficiaries like the American International Group, and possibly soon American Express. Of the initial $350 billion that Congress freed up, out of the $700 billion in bailout money contained in the law that passed last month, the Treasury Department has committed all but $60 billion. The shrinking pie and the growing uncertainty over who qualifies has thrown Washingtons legal and lobbying establishment into a mad scramble. The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers as well as for [other more] improbable candidates. The lobbying frenzy worries many traditional bankers the original targets of the rescue program who fear that it could blur, or even undermine, the governments effort to stabilize the financial system after its worst crisis since the 1930s. Adding to the frenzy is the possibility that the next Congress and White House could change the rules further. President-elect Barack Obama has added his voice by proposing that the struggling automakers get federal aid, which could mean giving them access to the fund. Meanwhile, the list of candidates for a piece of the bailout keeps growing. American Express won approval Monday to transform itself into a bank holding company, making the giant marketer of credit cards eligible for an infusion.
Note: American Express is a credit-card company; if it failed due to losses on its risky, predatory lending, its failure would present no "systemic risk" to the financial system as a whole. But by turning itself into a "bank holding company," as it just won approval to do, it can scoop up billions of easy money from the government anyway! For many revealing and reliable reports on the Wall Street bailout, click here.
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