Many remember that, back in the 1980’s, Drexel Burnham Lambert was allowed to fold into bankruptcy because of illegal actions. And even the S&L bailout in the 1980’s (that John W. McCain helped his buddy Charles Keating with) was not a private investment bank that has private profit sharing for its owners, employees and investors but not the public, who is now being forced to use public funding to prop up a private company, whose profits were most certainly not being shared with the American taxpayers.
I don’t expect to get a check from Bear Stearns (or Lehman Brothers or any of the other private investment banks who are in deep trouble) for all of the past years of profits, and I certainly don’t deserve one if I didn’t invest my money with them. But for a firm that should have known better than to take on such huge risk on something that, to somebody like me (who is not a financial expert) seemed like a very bad repeat of junk bonds or internet companies with no revenue model - that is its problem when those decisions and risks come back to bite it in the ass.
It is their money, and they chose to invest it in something that had a decent likelihood to fail. When it worked in its favor and there were massive profits to be had, the American people did not get to share in those profits. Now that it is a failure, and Bear Stearns (or whoever is next) is at risk of folding, well, sorry for having no pity there. And yes, I know that there will be people who will be out of a job, but as a former Andersen employee who didn’t even know that Enron was a client, and someone whose wife was left without a job when Andersen folded, I have a pretty good frame of reference.
Which leads to why Andersen was left to fold over what ultimately was a reversal of a guilty verdict. While it may have been on a technicality, the fact is that what certain Andersen employees and high level partners did was not on the “up and up”, and may have been illegal, it was the illegal pumping up of the shares by financial service companies, research analysts, underwriters and law firms that did much more damage to the economy as well as to Enron employees and shareholders. And not one of those companies or firms were given any meaningful penalty in terms of their crimes or transgressions”..
Besides the horrific precedent that is set by a government bailout using public taxpayer dollars of a private company that does not serve the public interest, there is the fact that this is (1) money that we don’t have and (2) should be used, if anything, for something that serves We the People.
Like expanding healthcare coverage, for example. But of course, there is a “slippery slope” about expanding healthcare coverage for uninsured families or children, right? However, the socialized treatment towards private financial services companies is acceptable to the same people that rail against government intervention, as well as government assistance to lower and middle income families who need it most or who lose everything from a natural disaster like, say, a hurricane.
What about those like absolute hypocrites like Grover Norquist and his supporters who wanted to drown the government in a bathtub? Where are they now when it comes to using government funds for something of this nature? Or what about Mister Bush’s own words just the other day about the use of government funds:
"I'm deeply concerned about law and regulation that will make it harder for the markets to recover — and when they recover, make it harder for this economy to be robust. And so we got to be careful and mindful that any time the government intervenes in the market, it must do so with clear purpose and great care. Government actions have far-reaching and unintended consequences."
So it is ok for the government to intervene in this market in order to prop up a failing private financial services company, that just so happens to have given multiple hundreds of thousands of dollars to the Bush campaigns and to republicans, and it is ok for Bush to leave the speech he made in order to attend a fundraiser that brought in nearly $1.5 million for the republican party.
Just don’t dare use the government or the taxpayer money for something like middle class tax breaks or healthcare. It needs to be saved for much more selective and important items - like bailing out private industry when their bad risks fail. Yet, in the name of “free markets”, those same companies that receive taxpayer money when they are failing get to keep all of their profits when times are good.
A perfect example of the “resiliency” and “belt tightening” that Americans need to exhibit in these tough times.