Bailout bill: Corrupt politicians steal your money

Today's Financial News - Posted October 2, 2008

You may not believe it, but our elected officials are not morons. In fact, they are very smart, calculating businessmen. The measure profits not in dollars but by votes. Unfortunately, the world of politics is far more corrupt than Wall Street.

By Andrew Snyder

Baltimore – (TFN): I do not know why I am surprised by this bailout-bill mess. After all, you do not make it to Capitol Hill by acting charitable, selfless or even ethical. You make it to Washington through back-stabbing political moves, shady campaign contributions, and a me-before-you attitude. The truth is blatantly obvious this week.

After Monday’s political debacle permanently smeared this country’s history, our kind senators thought they would step in and look like the heroes we have been waiting for. In dominating fashion, they passed a revised version of the administration’s bailout bill.

It was the Senate’s way of saying to their rivals in the House, “Ha, ha. We are better than you.”

It was also their way of taking advantage of the American taxpayer. Realizing the House absolutely must pass a bill or face severe political consequences, the Senate added over $150 billion worth of pork.

There are tax relief measures for alternative energy and technology research. There is funding for rural schools. And there is even a measure that forces companies and healthcare providers to increase their mental health treatment standards. The bill is filled with laws that would have failed on their own.

Other than this pork, the new package is almost financially identical to the original failed bill. It still provides $700 billion in bailout relief, the only thing Secretary Paulson ever asked for. It still gives the government non-voting warrants in the companies it is giving the money to. It still creates a channel, not an official limit, to cap executive pay. It still offers mortgage help to trouble homeowners. And it still creates an oversight committee that has the power to cancel the entire bailout anytime it wants.

The only new legislation that is even remotely beneficial to the country and the American taxpayer is a measure that would increase federal deposit guarantees from $100,000 to $250,000, while giving the FDIC unlimited borrowing potential.

When it comes down to it, even the guarantee increase is more political pandering designed to make the average Joe feel like the government is doing something good for him. In reality, how many Americans are going to run out and toss another hundred grand into their checking account? What impact will it have on banks with balance sheets ready to implode?

Wait, it gets better

Oh yeah, our senators are pulling the wool over our eyes with one other new measure. The new bill calls for a “study” of the effects of changing current bookkeeping standards and the impact of mark-to-market accounting on corporate balance sheets. Our leaders must not have gotten the memo on August 28 telling them the SEC voted to switch the nation over to international accounting standards. They would have to jump through a lot of very high hoops to make any serious accounting changes. But they do not expect you to know that.

Really, it is no surprise this kind of legislation came out of the Senate. After all, it is home to both presidential candidates and one vice presidential candidate. They saw the opportunity as a chance to make headlines and pander to the “unintelligent” voter.

Fortunately, you and I know better. We know our elected officials are full of, well, politics.

The new legislation will get voted on late tonight or sometime tomorrow morning. It will pass and our leaders will be clamoring to get their face in front of the cameras so they can read us a canned speech and add some more votes to their coffers.

As investors, this bailout bill will be just another factor in the giant equation that makes Wall Street so complicated. If you pay attention, do your homework, and do not fall for the lies and the hype, you have a very good shot at profiting from Capitol Hills work.

After all, no new law passes unless it will make somebody rich. Might as well be you, right ?