Out with the Auditors

I have been an internal auditor at a major international bank. There are different auditors involved in most corporations who report to different people, but generally, Auditors provide oversight. Internal auditors generally report to the owners or board of directors of a corporation. They report on the success that management is having managing risks. Risks can include wasted money, fraud, incompetence, etc.

Inspectors General (IGs) are the governmental equivalent. That they are being purged for doing their job should enrage us all. This tells us the same people who want to blow our hard earned money paid in taxes on their own projects (lining their pockets) are getting the overseers fired who can blow the whistle on their behavior.

Read the article here.

Highlights of the fox new story:

"The mounting evidence that there might be political interference with the IGs is disturbing," said Pete Sepp, vice president for policy and communications at the National Taxpayers Union. "The IGs are being emasculated."

Congress missed an opportunity to bolster the IGs when it debated the 2008 IG Reform Act. Provisions that would have allowed only the president to remove IGs for good cause "lay on the cutting room floor" and didn't make it into the final bill passed last September, she said.

"Let big banks fail"

That's the message top economists have for the US government dealing with a bloated and ineffective financial system in breakdown. The story can be found here.

Highlights:

Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson warned the Joint Economic Committee of Congress that the current government policy of propping up troubled financial giants could impede an economic recovery.

They each said spending taxpayer dollars freely on behalf of struggling big banks risks drowning U.S. productive capacity in debt -- while handing what amounts to an enormously costly subsidy to politically powerful financial sector insiders.

If the Obama administration fails to hold troubled banks accountable for their problems, the U.S. could face a lost decade of economic growth like Japan's in the 1990s, they said.

Federal Reserve Bank of Kansas City President Thomas Hoenig, said policymakers must allow troubled firms to fail rather than propping them up, a la AIG (AIG, Fortune 500). He said banks must be treated consistently, regardless of their size or connections, for the sake of restoring confidence to markets and normal function to the economy.

"Rather than letting the market system objectively discipline the firms through failure and stockholder loss," Hoenig said of the current approach to bailouts, "we tend to micromanage the institutions and punish those within reach."

20 Criminal Probes and 6 Audits Underway on TARP Money Usage

Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, released a 250-page report detailing a long list of concerns about government efforts to prop up hundreds of banks, Wall Street firms and auto companies. There's not a lot in this story on CNN, or this article in the Wall Street Journal, nor this article on the Washington Post. The report in total was just posted to the oversight group's web site here.

Other reports from the oversight group are here: http://www.sigtarp.gov/reports.shtml

Highlights from the report:

The Troubled Asset Relief Program (“TARP”) now includes 12 separate, but often interrelated, programs involving Government and private funds of up to almost $3 trillion — roughly the equivalent of last year’s entire Federal budget.



SIGTARP has initiated, to date, almost 20 preliminary and full criminal investigations. Although the details of those investigations generally will not be discussed unless and until public action is taken, the cases vary widely in subject matter and include large corporate and securities fraud matters affecting TARP investments, tax matters, insider trading, public corruption, and mortgage-modifi cation fraud.

SIGTARP’s mission is to advance economic stability through transparency, coordinated
oversight, and robust enforcement, thereby being a voice for, and protecting
the interests of, those who fund TARP — i.e., the American taxpayers.

Tea Party Coverage

http://www.cnn.com/2009/POLITICS/04/15/tea.parties/index.html

Ron Paul on how we got here

Found here on Youtube Ron Paul speaks on how we got into this mess and what we are doing wrong trying to get out of it.

Some sense, 11% or less, in a weekend of stimulus eliminations

Congretional Democrats, believe it or not, with a few Republicans (rumored to be Sens. Susan Collins and Olympia Snowe, both of Maine, and Sen. Arlen Specter of Pennsylvania) this weekend have managed to trim a bit of fat from the "stimulus" bill which is approaching $1 Trillion ($1,000,000,000,000). The detailed list is in this article on CNN. The numbers don't look as large without all the 0s so I've taken the liberty of modifying the list and providing a total which doesn't show up in the article:

$1 billion	$1,000,000,000	for Energy Loan Guarantees
$1 billion	$1,000,000,000	for Head Start/Early Start
$1.2 billion	$1,200,000,000	for retrofitting Project 8 housing
$1.25 billion	$1,250,000,000	for project based rental
$16 billion	$16,000,000,000	for school construction
$2 billion	$2,000,000,000	for broadband
$2 billion	$2,000,000,000	for Health Information Technology Grants
$2.25 billion	$2,250,000,000	for Neighborhood Stabilization
$3.5 billion	$3,500,000,000	for energy-efficient federal buildings (original bill $7 billion)
$3.5 billion	$3,500,000,000	for higher education construction
$4.5 billion	$4,500,000,000	for General Services Administration
$40 billion	$40,000,000,000	for state fiscal stabilization (includes $7.50 billion of state incentive grants)
$5.8 billion	$5,800,000,000	for Health Prevention Activity
$10 million	$10,000,000	state and local law enforcement
$100 million	$100,000,000	for distance learning
$100 million	$100,000,000	for Farm Service Agency modernization
$100 million	$100,000,000	for National Institute of Standards and Technology
$100 million	$100,000,000	for science
$100 million	$100,000,000	from FBI construction (original bill $400 million)
$100 million	$100,000,000	from law enforcement wireless (original bill $200 million)
$100 million	$100,000,000	from National Oceanic and Atmospheric Administration (original bill $427 million)
$122 million	$122,000,000	for Coast Guard Cutters, modifies use
$122 million	$122,000,000	for Coast Guard polar icebreaker/cutters
$140 million	$140,000,000	for BYRNE Competitive grant program
$165 million	$165,000,000	for Forest Service capital improvement
$20 million	$20,000,000	for working capital fund
$200 million	$200,000,000	for National Science Foundation
$200 million	$200,000,000	from Environmental Protection Agency Superfund (original bill $800 million)
$200 million	$200,000,000	Transportation Security Administration
$25 million	$25,000,000	for Fish and Wildlife
$25 million	$25,000,000	for Marshalls Construction
$300 million	$300,000,000	for BYRNE Formula grant program
$300 million	$300,000,000	for federal prisons
$300 million	$300,000,000	from federal fleet of hybrid vehicles (original bill $600 million)
$50 million	$50,000,000	for aeronautics
$50 million	$50,000,000	for aquaculture
$50 million	$50,000,000	for Cooperative State Research, Education and Extension Service
$50 million	$50,000,000	for Cross Agency Support
$50 million	$50,000,000	for detention trustee
$50 million	$50,000,000	for exploration
$50 million	$50,000,000	for NASA
$50 million	$50,000,000	from Department of Homeland Security
$55 million	$55,000,000	for historic preservation
$55 million	$55,000,000	for historic preservation
$600 million	$600,000,000	for Title I (No Child Left Behind)
$65 million	$65,000,000	for watershed rehabilitation
$75 million	$75,000,000	from Smithsonian (original bill $150 million)
$89 million	$89,000,000	General Services Administration operations
$90 million	$90,000,000	for State and Private Wildlife Fire Management
$98 million	$98,000,000	for school nutrition

Grand Total cut is $88.36 billion, or 11% of the supposed $800 billion bill

Libertarian Stimulus

Not sure how the carbon tax ideas got into Libertarian ideology, but they have a good perspective on economic stimulus that is detailed in this comentary.

Jeffrey A. Miron is senior lecturer in economics at Harvard University

When libertarians question the merit of President Obama's stimulus package, a frequent rejoinder is, "Well, we have to do something." This is hardly a persuasive response. If the cure is worse than the disease, it is better to live with the disease.

In any case, libertarians do not argue for doing nothing; rather, they advocate eliminating or adjusting policies that are bad for the economy independent of the recession.

It is tempting to believe that every problem has a solution, but the reality is not so nice. It is possible, even likely, that the best we can do is fix things we know how to fix, and then get out of the way. This may not ameliorate the current situation, but it avoids making things worse. In economics as in medicine -- first, do no harm.

Learning from History

The last post makes me think to remind people to learn from history. Here's the Wikipedia entry.

Under the section labeled "Early Response"...

Secretary of the Treasury Andrew Mellon advised President Hoover that shock treatment would be the best response: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.... That will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."[32] Hoover rejected this advice, and started numerous programs, all of which failed to reverse the downturn.[33]

What did financial services executives do with their bailout?

They gave themselves bonuses!!! And they want more money from us, the taxpayer!! Here's the NBC News Story with the details.

President Barack Obama issued a withering critique Thursday of Wall Street corporate behavior, calling it "the height of irresponsibility" for Wall Street employees to be paid more than $18 billion in bonuses last year while their financial sector was crumbling.

This, a day after he hosted them at the Whitehouse doting on their front line status in the "war on recession". 2007 Executive bonuses were the 6th highest ever during the year that was the worst financially since 1939 when the last "great depression" ended.

How did we get here?

Here's a great CNN article that tracks the basics of what happened.

"As long as everyone was paying their mortgage, that was fine," said Ali Velshi, CNN's chief business correspondent. "[But] we didn't take into account with these mortgages that people might lose their jobs, the interest rate might go up and the housing prices may go down.

"Guess what? All three happened."

New $819 Billion followup to TARP Passes House

Now that this pork filled bill is through the US House of Representatives, it goes to the Senate next week. Here's an article on the package. All Republicans and 11 Democrats voted against this bill. If the American people see the details we would be even more opposed. 

Here's some pro/con on the bill.

Big Investment Banks and the Oil Price Bubble

60 Minutes report tonight reveals something of the financial institutions we've bailed out and according to our next president must continue to bail out with even more of our hard earned cash.

How much have you been paying for gasoline, diesel, heating oil? This story shows that during the winter of 2007-2008, while demand was dropping and supply was rising, the world's largest financial institutions drove up the price of fuel on the commodities market, earning billions. Who paid for their gains? Us, the consumers.

More on the story here

Help stop the federally assisted fleecing of the US consumer by writing your representatives NOW! Links are below.