Friday, March 27, 2009

We don't need no stinkin' counterparties.

The latest outrage is that AIG took the TARP money it got to pay its counterparties and gave it to – wait for it – its counterparties. Yikes. What's next? Will the FDIC start paying depositors of failed banks without due regard to their political popularity? And what about those promises AIG made to its pension customers. Some of those guys are rich. Why should they get bailed out? And plaintiff's lawyers. Everybody hates them. Why are their fees being paid by taxpayer money? Where will it end?

I say it stops now. Every recipient of TARP funds must sign a pledge that for every dollar it receives from the program, it will increase by one dollar the amount it lends to people with bad credit. That is the only way Mr. Cuomo can be sure that no one who doesn't need the money gets any money. I understand that this approach may pose certain risks to the global financial system, but this is a demagocracy, and there are Gubernatorial races to be considered. We just cannot have people who already have money getting more of it, even if restoring their confidence in the system is why the money was given out in the first place.

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