This is part of the interview by the Globe with Elizabeth Warren, chair of the Congressional Oversight Panel
Q: You've been quite critical of the Treasury. What troubles you most about what you're getting and what you're not getting?
A: There's no discussion of the overall policy. Instead, there are specific programs that are announced, and from that, it's necessary to reason backwards to figure out what the goal must have been. It's like a "Jeopardy!" game. If this is the answer, what was the question?..
Q: What [is] the underlying problem?...
A: I can only look at the evidence. When the panel asked [Bush administration Treasury Secretary Henry] Paulson in December whether or not the American taxpayer was getting full value when it invested billions of dollars of the original TARP money, he sent a letter back to me that said, "Yes. These are par transactions." That means, in effect, for every $100 of taxpayer money that went into those banks, the US taxpayer was getting back $100 worth of stock and warrants. We did an independent valuation of the transactions, crunched a lot of numbers, used a lot of different approaches for how to value the transactions. And we discovered that for every $100 of taxpayer money put into the financial institutions, the taxpayer got back about $66 in current value.
A: Treasury specifically designed a program that had the effect of subsidizing the financial institutions, and simultaneously represented to the panel and to the American people that there was no subsidization.
Q: So they weren't really telling you the truth?
A: They said one thing and did another.
Q: It seems that there's a culture clash. The public-policy culture says there should be public participation, and the goal is to allocate the benefits and the pain as fairly as you can. And then there's the Wall Street culture, which is built upon self-interested institutions maximizing benefit without a lot of outside interference. Those two things clash pretty strongly in the AIG case.
A: I see this as an insiders/outsiders problem. The insiders, the investment bankers and other financial services specialists, have a system that works very well for them. The problem is they’re now using the outsiders’ money to fund that system. Their system has collapsed. AIG is not functional without substantial taxpayer dollars. And the insiders don’t seem to have appreciated the seismic shift in their world when they need money, gifts, subsidies from outsiders.
Anyone who thinks that they can take tens of billions of dollars of taxpayer money and continue to operate business as usual lives in a fantasy world that I don’t understand. Culture clash? No! This is not a culture clash. This is not about taxpayers who don’t get it. This is about people who think [in a] fantasy, that their world is prosperous and continues to create value that can be parsed out privately, when they are relying on huge subsidies from the taxpayer. It’s just wrong!
The picture above is Francoise le Moyne's 1737, painting Time saving Truth from Falsehood and Envy.
That's Treasury's plan.
Subsidize the financials now, and time will cure the problems, and because the circumstances were so exigent, the falsehoods that the plan were done under will prove to be for the greater good.
After all, given enough time, didn't this Universe create itself?
How is it then, that time won't solve these problems?
But if you are short, that's truth you won't believe in.
Because it's not their truth!