WASHINGTON — At a quarter till midnight last Friday, with a deal to avert a government shutdown barely an hour old, Senator Harry Reid phoned a fellow Democratic senator, Ron Wyden, at home and startled him with some bad news. “You lost free-choice vouchers,” Mr. Wyden recalls Mr. Reid telling him.
Even delivered in shorthand, the call’s meaning was clear to Mr. Wyden: a health care plan he had succeeded in getting passed months earlier despite furious lobbying by big business and labor had been pulled out of the blue and killed as part of the broader budget deal struck between the White House and Congress. What was most perplexing was that it had little to do with budgets or government shutdowns.
“I was flabbergasted, just flabbergasted,” Mr. Wyden, of Oregon, said Tuesday in an interview, describing the demise of a plan that would have allowed some 300,000 workers to pick their own insurance coverage through employer-financed vouchers.
With $38 billion in cuts on the line in a $3.5 trillion budget, the clash over federal spending played out in numbers so big that most standard calculators had trouble tracking all the zeros. But in the end, a handful of relatively small-bore line items affecting particular industries attracted some of the most aggressive lobbying behind the scenes, as business interests, health care providers and others fought to hold on to, or kill, proposals that affected their bottom line.
I would like to point out that many of the “cuts” in this budget are money that was allocated for new programs, or money that wasn’t spent for existing programs. So while there are things I’m really unhappy about, don’t take those cuts literally. It’s complicated.
The PCCC is lining up supporters to say if Obama cuts Medicare or Social Security, they’re cutting off campaign contributions.
It’s long, go read the whole infuriating thing. Matt Taibbi in Rolling Stone:
But if you want to get a true sense of what the “shadow budget” is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall’s haul doesn’t seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn’t seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley’s investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.
The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility. But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called “giving already stinking rich people gobs of money for no fucking reason at all.” If you want to learn how the shadow budget works, follow along. This is what welfare for the rich looks like.
[...] In the case of Waterfall TALF Opportunity, here’s what we know: The company was founded in June 2009 with $14.87 million of investment capital, money that likely came from Christy Mack and Susan Karches. The two Wall Street wives then used the $220 million they got from the Fed to buy up a bunch of securities, including a large pool of commercial mortgages managed by Credit Suisse, a company John Mack once headed. Those securities were valued at $253.6 million, though the Fed refuses to explain how it arrived at that estimate. And here’s the kicker: Of the $220 million the two wives got from the Fed, roughly $150 million had not been paid back as of last fall — meaning that you and I are still on the hook for most of whatever the Wall Street spouses bought on their government-funded shopping spree.
The public has no way of knowing how much Christy Mack and Susan Karches earned on these transactions, because the Fed has repeatedly declined to provide any information about how it priced the individual securities bought as part of programs like TALF. In the Waterfall deal, for instance, we know the Fed pledged some $14 million against a block of securities called “Credit Suisse Commercial Mortgage Trust Series 2007-C2″ — but that data is meaningless without knowing how many units were bought. It’s like saying the Fed gave Waterfall $14 million to buy cars. Did Waterfall pay $5,000 per car, or $500,000? We have no idea. “There’s no way of validating or invalidating the Fed’s process in TALF without this pricing information,” says Gary Aguirre, a former SEC official who was fired years ago after he tried to interview John Mack in an insider-trading case.
In early April, in an attempt to learn exactly how much Mack and Karches made on the TALF deals, Sen. Chuck Grassley of Iowa wrote a letter to Waterfall asking 21 detailed questions about the transactions. In addition, Sen. Sanders has personally asked Fed chief Bernanke to provide more complete information on the TALF loans given not only to Christy Mack but to gazillionaires like former Miami Dolphins owner H. Wayne Huizenga and hedge-fund shark John Paulson. But Bernanke bluntly refused to provide the information — and the Fed has similarly stonewalled other oversight agencies, including the General Accounting Office and TARP’s special inspector general.
Christy Mack and Susan Karches did not respond to requests for comments for this story. But even without more information about the loans they got from the Fed, we know that TALF wasn’t the only risk-free money being handed over to Wall Street. During the financial crisis, the Fed routinely made billions of dollars in “emergency” loans to big banks at near-zero interest. Many of the banks then turned around and used the money to buy Treasury bonds at higher interest rates — essentially loaning the money back to the government at an inflated rate. “People talk about how these were loans that were paid back,” says a congressional aide who has studied the transactions. “But when the state is lending money at zero percent and the banks are turning around and lending that money back to the state at three percent, how is that different from just handing rich people money?”
I was once a part-time copy editor at a Gannett paper. You can’t believe the interviewing process — I felt like I was applying for a job at the State Department. Anyway, I got hired — at $10 an hour.
I didn’t stay long; the commute home on I-95 was agonizing (35 minutes in, up to two hours home). When I quit, the editor who hired me acted as if I were throwing away gold coins. “You could have a career here,” he said.
Tonight at 9pm, speaking with Nicole Sandler of Radio or Not, who will share the trauma of losing her house through a short sale.
Click here to listen. Call 646-200-3440 with questions or comments.
From a forwarded email…
Here are the signs:
I got a pre-declined credit card in the mail.
Wives are having sex with their husbands because they can’t afford batteries.
CEO’s are now playing miniature golf.
Exxon-Mobil laid off 25 Congressmen.
A stripper was killed when her audience showered her with rolls of pennies while she danced.
I saw a Mormon polygamist with only one wife.
If the bank returns your cheque marked “Insufficient Funds,” you call them and ask if they meant you or them.
McDonald’s is selling the 1/4 ouncer.
Angelina Jolie adopted a child from America
Parents in Beverly Hills fired their nannies and learned their children’s names.
My cousin had an exorcism but couldn’t afford to pay for it, and they re-possessed her!
A truckload of Americans was caught sneaking into Mexico.
A picture is now only worth 200 words.
The Treasure Island casino in Las Vegas is now managed by Somali pirates.
Congress says they are looking into this Bernard Madoff scandal. Oh Great! The guy who made $50 billion disappear is being investigated by the people who made $1.5 trillion disappear!
I was so depressed last night thinking about the economy, wars, jobs, my savings, Social Security, retirement funds, etc., I called the Suicide Hotline. I got a call centre in Pakistan, and when I told them I was suicidal, they got all excited, and asked if I could drive a truck.