Count me among the 28 percent of Americans who don’t understand the Wall Street bailout plan. And also count me among the one-third of Americans who oppose it. By “it” I mean the whole shebang. No, I don’t care if you add some crumbs for Main Street when you provide a banquet for Wall Street. No, I don’t care if you have the Pope, the Archbishop of Canterbury and Billy Graham as watchdogs to ensure the money doesn’t end up in the pockets of the usual suspects. And I don’t care if you enact one of those 11,000-page bills laying out layers of regulations and oversight to prevent a recurrence of this rip-off. To me, that’s like shutting the barn door after the horse has escaped. And didn’t we do all that stuff just 20 years ago after the Savings & Loans were looted?
Here’s what I think I understand: Henry Paulson, when he was head of Goldman Sachs, and other financial heavy hitters came up with plans to bundle thousands of risky mortgages together, slice the bundles up into millions of tiny slivers and then sell the slivers like shares in a public company. Turns out many of the home buyers who took out the original mortgages defaulted and their houses are being foreclosed on. So that left a whole lot of people owning pieces of paper that represent a slice of a pie composed of bundled mortgages, many of which are non-performing (that means not bringing in any money). That sounds perfectly logical to me. If they had bought Graham-Field, as I did back in the ’90s. they would have ended up owning pieces of paper that represented a tiny slice of ownership in a defunct company. I don’t think Paulson would buy my Graham-Field shares, do you?
So tell me again why I should care about the people who are left holding tiny pieces of moribund mortgages. Can’t they hire a lawyer and figure out how much of the real estate they can lay claim to? Maybe a front porch railing here, or a garage door there, or the roof of a back patio… (Unfortunately, it’s more complicated than that because the Wall Street whiz kids also sold the right to buy the slivers on a given date, etc., etc. But they are the ones who figured out how to make that work; it should be up to them to figure out how to untangle the mess they created.)
Paulson, who is now treasury secretary, plans to buy up the slivers of paper, for which he is fixing to pay inflated prices. And guess what? After paying more than the pieces of paper are worth, he plans to hire the previous owners of the paper as consultants to tell him how to get rid of them. You can imagine the salaries these parasites will get, too. Come on, man! That’s a con game, pure and simple.
I can tell Paulson how to get rid of the darned things – for free. He should set up a program where the slivers can be traded back into bundles and the bundles split up into individual mortgages. Then, the foreclosed real estate can be sold on the open market. There’s a name for that kind of process – it’s called “free enterprise.”
But he wouldn’t get my seven hundred billion dollars to buy up those pieces of paper. In fact, he wouldn’t get a thin dime from me. I don’t care if the credit market – or Hell – freezes over. The money changers will have to get over it eventually, and in the meantime we Americans might learn to live within our means.