What's A Few Billion Dollars Among Friends?

As always, it is always so easy to come up with examples of the political class wasting a billion or two of taxpayer dollars. In an AP article today, as posted on earthlink.net, the Inspector General in charge of auditing the $700 billion financial industry bailout, Neil Barofsky, issued a report critical of Treasury Secretary Tim Geithner. Mr. Geithner was the head of the New York Fed prior to his current assignment. In that job, his office was responsible for overseeing the bailout of insurance giant AIG. (note: as a side note, you might remember Mr. Geithner's name from previous posts that outlined how he failed to pay about $30,000 in back taxes until he was nominated to be Treasury secretary. For some reason, despite the tax shortfall, he still got the job.)

You may remember that last fall AIG received $180 billion in taxpayer bailout money for 1) being totally incompetent in managing its business and 2) convincing the political class that the world would end along with the world's financial system if it was not bailed out. Despite being incompetent, AIG took $1,75 billion of that taxpayer money and paid out bonuses to its employees. Besides being an outrageous flushing of taxpayer dollars, Geithner looks especially bad in the Barofsky report since he has always claimed he was unaware of the payouts until March, 2009. However, the report proves his staff at the NY Fed knew of the payments back in November, 2009. Thus, Geithner is either incompetent since he was managing taxpayer giveaways without knowing where the money was going until March, even though his staff knew in November, or he his trying to cover his mistakes by saying he did not find out until March but did indeed know in November, along with the rest of his staff, but allowed it to happen anyway.

As if that screw up it not bad enough, consider the following quote from the article:

"In a report released Tuesday, Barofsky wrote that Treasury did not understand AIG's pay structures when it gave the firm billions in aid last fall. He said Wednesday that officials at the New York Fed "still did not have their arms wrapped around" AIG's compensation structure when he finished his audit last month."

Thus, according to the inspector general, almost one year after the multi billion dollar bailout, the Fed STILL does not know what they are doing. Unbelievable that the political class could throw together a massive bailout using taxpayer money, allow large bonuses to go to people in AIG, many of whom were responsible for a lot of the financial meltdown, and eleven months later still not even know the whole picture.

This is just another instance that the book, "Love My Country, Loathe My Government", addresses in some of the proposed steps to fix the country. Step 34, a step that remove politicians from committee and subcommittee posts for lax oversight, would be a perfect remedy here. Those politicians that were sitting on committees overseeing the bailout funds should be removed for this gross incompetence in the AIG matter. Step 1, the downsizing of government, is another step that would address this problem since with fewer things to do in a downsized government, the chance for multi billion dollar screw ups would also go down.