Bailout backlash building

Brent Budowsky:

Americans have begun an angry backlash against bailouts that could become a national revolt in 2009.

The Federal Reserve has cut interest rates by some 500 basis points. Government agencies have poured close to $8 trillion into banking bailouts. The Treasury secretary has promoted massive government support of troubled, failed and corrupted institutions.

This program is a 100 percent top-down exercise involving the largest amount of money in history.

Virtually none of this money directly helps average Americans. Virtually none of it trickles down to the people who suffer the most and pay for the program.

After $8 trillion we are still debating whether any money should be used to directly help average Americans.

The Fed has cut rates dramatically. It is shameful that after all of these rate cuts and all of these bailouts, banks continue raising credit card interest rates, lowering credit lines, refusing to lend to creditworthy businesses and allowing the Grapes of Wrath-like foreclosure crisis to continue with minimal effort to address it.

The banks don’t trust the banks. The banks don’t trust their customers. Business does not trust the banks or the government. Taxpayers don’t trust anyone.

The only trust is from the Fed and the Treasury Department that transfer huge sums of money to the large institutions that caused the problem, often in secret, often involving complicated financial derivatives that neither Congress nor many CEOs understand, based on trust that these institutions will use this money wisely, which often they have not.

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The public backlash is only beginning. It will rise with every new scandal and Ponzi scheme and every new increase in credit card rates. It has already infected good judgment in the auto case, where major support is needed, tied to major plans for industry renewal.

I do not oppose bailouts, I oppose bailouts managed with banana-republic standards of secrecy and incompetence in which recipients of massive taxpayer largesse work against those who pay for this largesse.

Today the Federal Reserve Board refuses to disclose information regarding some $2 trillion provided to financial institutions. Bloomberg business news has filed a historic freedom-of-information case seeking disclosure. Congress and the president-elect should support it.

Bailout money is not a private account that belongs to Fed Chairman Ben Bernanke, Fed governors, the Treasury secretary or the banks. It is the people’s money. It should be used to benefit the people. It should be monitored through the checks and balances of the democratic process.

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The leaders of the bailout are not managing their message very well. Perhaps they are too busy with financial triage to focus on the problem, but they need to put someone on the problem or it will fester into a much larger one.

When the public sees money going to the banks for practically zero interest and they don't see the banks lending at reasonable rates there are going to be questions an explanations are needed.