The politicization of bank bailouts

Of course we know that some of the bank bailouts have been made possible by having friends in very high places.

So far, most of those have come at the discretion of appointed leaders within the Treasury. As such, it's a little harder to nail down the exact way in which strings are being pulled.

Now, a Wall Street Journal story indicates that Democratic Representative Barney Frank appears to have influenced legislation to benefit OneUnited Bank in his home state of Massachusetts.

As head of the House Financial Services Committee, Frank is in a position to do such things. Unfortunately, he's not alone, according to the story:

Several Ohio banks received funds after Ohio's congressional delegation complained bitterly about the treatment of Cleveland-based National City Corp., which regulators forced into a merger rather than provide with cash. And in Alabama, the state's top banking official says a windfall there -- five banks are slated to receive funds -- is testament to the influence of two powerful Alabama lawmakers who sit on key congressional committees.

If we want to keep political favoritism out of the private sector, which is one of the things President Obama campaigned for, then we need to simply let these banks fail. Sell the assets to the highest bidder. If no one buys the debts, well I guess the debts are forgiven.

How much further down the road to corporate welfare must we go?

More on toxic debts, bad banks

Talkingpointsmemo.com has a good post on the idea of an aggregator bank taking up the toxic debt.

Here's a snippet of the post, with a good analogy on what the banks are trying to pull over our heads.

It's like a scene out of some bizarro, Wall Streetified Antique Road Show. The bankers come in with their old china and cabinets from the attic that they're sure are worth $20,000. Sadly, the appraiser informs them they're only worth about $850. Only of course they're not from the attic. They bought them only last year convinced $20,000 was a steal back at the height of the antique crap craze. And now they're condemned to roam the byways of America looking for an appraiser or antique buyer who will finally recognize the true value of their crap and pay them $20,000 to help them get their money back. Unless of course we agree to pay them $20,000 for it now and let them get back to their lives and stop all the craziness.

If the government wants to waste money, send it to those who really know how to waste it - American consumers.