“I strongly believe that those financial institutions receiving federal aid through the TARP must quickly provide a full accounting for their funds received, and I sincerely hope that the Department of the Treasury will move quickly to address this massive transparency gap,” said Klobuchar. “The Treasury Department’s failure to collect information on how companies are using TARP funds is, quite simply, unacceptable.”

Klobuchar said, “[R]eports of questionable uses of TARP funds, still-frozen credit markets and the continued slowing of the economy … called into question whether the funds were being used appropriately.”

The full letter after the jump.

The Honorable Henry M. Paulson, Jr.
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220

Dear Secretary Paulson:

I am writing to you today regarding my concerns about the Troubled Asset Relief Program (TARP). I strongly believe that those financial institutions receiving federal aid through the TARP must quickly provide a full accounting for their funds received, and I sincerely hope that the Department of the Treasury will move quickly to address this massive transparency gap.

In the nearly three months since the Emergency Economic Stabilization Act was signed into law, American families have anxiously waited for its benefits to reach Main Street. But recent economic statistics show that these benefits are not helping those who are the most in need. Credit is not loosening up. Sales of existing homes dropped by 8.6 percent in November, and we have lost at least 1.9 million jobs this year. It is not surprising that the Conference Board’s consumer confidence index fell to an all-time low of 38 last week.

The Treasury Department’s failure to collect information on how companies are using TARP funds is, quite simply, unacceptable. Therefore, I hope that you will work with the Office of Financial Stability to determine a path forward that will enable us to once and for all answer the growing number of questions regarding appropriate expenditure of TARP funds.

Thank you for your consideration of my request. I look forward to your prompt reply.

Sincerely,

Amy Klobuchar

In this week’s edition of the Schultz Report, David Schultz examines the looming vote recount in the Minnesota US Senate face-off between Sen. Norm Coleman and Al Franken.

Is the situation here another Florida 2000 cage match, as so many pundits are claiming? “No,” says Schultz, “in the sense that we don’t face the same problems as Florida on several counts. In Florida, we had clear evidence of a secretary of state, Katherine Harris, engaging in vote suppression and purges of voter lists. We have no evidence of that in Minnesota. The secretary of state is trying to figure out how to count every vote, and to encourage people to vote. Second, unlike Florida, where we had multiple different technologies used across the state to vote, Minnesota pretty much has one technology to vote.

David Schultz

“Third, unlike Florida, when they actually started doing the recount in the four counties — where the Supreme Court entered in, for good or for bad, was when it reacted to the problems we all remember, where you had people in one county counting ballots differently [from another county]. Is a dimpled chad counted? A pregnant chad? What if it had two of its corners torn loose? In that state, you had wide variance across the four recount counties regarding what was considered to be the intent of the voter. That’s where the Supreme Court entered in and said you had to have uniform standards.

“Unlike that problem in Florida, Minnesota has a state law that describes how you ascertain voter intent. And what the law first says is that, if at all possible, the intent of the voter should be ascertained. And more importantly, the law says that technical noncompliance with the law in terms of how you cast your vote should not be an obstacle to counting votes. The law says that even if you don’t follow [ballot rules] to a tee — even if, for example, you circle a name as opposed to filling in a bubble dot — if you can figure out how that person meant to vote, you have to do it. So the law is very different in terms of establishing uniform standards.

“For all those reasons, we’re not Florida. Where we are Florida is in terms of the ideological battle that’s being waged by the Republicans to attack Mark Ritchie and to cast doubts on what’s happening in Minnesota — anywhere from claiming that Mark Ritchie is the new Katherine Harris to claiming that votes are being manufactured. To that extent, Minnesota has become a powerful battleground, like Florida. And additionally, while Florida was the state that decided a presidency, it is possible that, depending on what happens in Alaska and Georgia, Minnesota could be the deciding state to determine whether the Democrats get 60 votes in the US Senate. If they get 60 votes in the Senate, that means they have the votes to break a Republican filibuster. So the stakes are enormous, and from that score we’re potentially another Florida in terms of the high stakes going on.”

Listen: David Schultz discusses the great recount shootout of ’08 (and Michele Bachmann’s last laugh on the bailout bill) (12:48)

“California and a number of other state and local governments are experiencing the lack of liquidity in the credit markets firsthand,” Schwarzenegger wrote. “Many state and local governments have been unable to secure financing for bond offerings and for routine cash flow used to make critical payments to schools, local governments and law enforcement. While some states may be able to absorb a delay or obtain high-interest financing through private banks, California is so large that our short-term cash flow needs exceed the entire budget of some states. We expect to issue $7 billion in Revenue Anticipation Notes for short-term cash flow purposes in a matter of days.”

LA Times story

Schwarzenegger letter (PDF)

Treasury Secretary Henry Paulson (left) and Fed chair Ben Bernanke: dancing as fast as they can

Poring over news accounts of the deal struck last night by congressional leaders, the only thing that seems clear is that the widely touted protections against taxpayers getting stuck with the ultimate tab are scant and vague. The pitch on behalf of the deal still emphasizes the potential resale of all the bad paper after the market recovers, but as you’ll see in the analysis pieces highlighted below, it’s unlikely that the sorts of assets the Treasury Department will be buying are ever going to be worth anything. The terms of this deal punt the question of recovering bailout funds from the financial sector five years down the road: “[I]f the Treasury program to purchase and resell troubled mortgage-backed securities has lost money after five years, the president must submit a plan to Congress to recover those losses from the financial industry. Presumably that plan would involve new fees or taxes, perhaps on securities transactions” (NYT).

Likewise, the broad call to provide help to foreclosure-stricken homeowners as part of the package has fallen by the wayside. In place of programs or provisions to rework the terms of onerous mortgages, “[the bailout legislation] calls on the Treasury, as an owner of mortgage securities, to ‘encourage the servicers of the underlying mortgages’ to minimize foreclosures” (WSJ). As guarantees go, that’s roughly the equivalent of promising to pray for a good outcome.

Similarly, any legislated limits on future executive compensation appear pretty much restricted to the banning of new golden parachute deals for execs departing firms that have taken bailout money.

Here are the must-reads from the past few days.

THE DEAL

Wall Street Journal, “US seals bailout deal”

Financial Times, “Bernanke confident on restoring credit flows”

New York Times, “Bailout plan in hand, House braces for tough vote”

BACKSTORY: LEHMAN, AIG, AND THE TUMBLING DOMINOES

WSJ, “Lehman’s demise triggered cash crunch around the globe”

NYT, “Behind insurer’s crisis, blind eye to a web of risk”

ANALYSIS OF THE CRISIS:

Michael Hudson, “The insanity of the $700 billion giveaway”

Joseph E. Stiglitz, “A better bailout”

Walden Bello, “Wall Street meltdown primer”

Politico questions McCain’s temperament:

On Thursday afternoon, McCain swept into Washington, walked to his office with pal Joe Lieberman, said little at a contentious White House meeting, did a few TV interviews, sped off to his home and proclaimed, through a spokesperson, that he was “optimistic” about bringing House Republicans “on board.”

McCain’s high-wire intervention in the financial crisis is his latest showstopper move – and his riskiest. He might succeed, but the candidate’s penchant for the dramatic has also raised anew potentially damaging questions of his age, executive abilities and, most of all, his temperament.

Here’s Joe Klein’s analysis:

McCain’s erratic, and irresponsible, behavior this week isn’t happening in a vacuum. This isn’t just politics–even George W. Bush, who never failed to take a partisan advantage in his presidency, realizes that. It is a time for leadership, a time for John McCain to explain to his fellow Republicans that this is one moment where government activism is absolutely necessary, that they have to get behind the Paulson compromise–and also try to explain to the general public, as Bush did on Wednesday night, that their savings and mortgages may be at stake if federal action isn’t taken. We’ve seen nothing like that from McCain. Just histrionics.

John Judis is even more brutal:

It is simply unpatriotic–it’s an insult to flag, country, and all the things that McCain claims to hold dear–for McCain to hold this financial crisis hostage to his political ambitions. McCain doesn’t know a thing about finance and is [in] no position to help work out an agreement. If we do suffer a serious bank run, or a run on the dollar, it can be laid directly at his feet. As I said to friends last night, if McCain had been president at this point, I would have wanted to impeach him.

Then there’s this hilarious bit from First Read:

During a speech on the Senate floor this morning, Sen. Chuck Schumer (D) urged President Bush to “respectfully tell Sen. McCain to get out of town. He’s not helping.” …

He added, “When you inject presidential politics into some of the most difficult negotiations under normal circumstances, it is fraught with difficulty. Before McCain made his announcement, we were making great progress. Now after his announcement, we are behind the 8 ball. We have to put things back together again.” …

“So this is a plea to President Bush, for the sake of America, please get your party in line. Get the House Republicans to be more constructive; get Sen. McCain to leave town and not throw fire on these flames. And maybe we can get something done.”

Earlier this week, that wishful thinking turned into bargaining amongst lawmakers for a history-changing $700 billion-plus bailout for the investment banks on Wall Street–the very ones accountable for the nefarious lending practices that created the now-worthless mortgage-backed securities that are, according to Treasury Secretary Henry Pauslon, wreaking havoc on the market. Now, at least for many Americans on Main Street, they’ve finally hit the next stage of serious anger.

Darryl Dahlheimer

“What’s really upsetting about the current proposals this week is it’s a huge power grab with very little proposed oversight. It’s kind of like prescribing more of the illness to get better,” says Darryl Dahlheimer, a project manager at Lutheran Social Service financial counseling in Minneapolis. The organization counseled more than 10,000 people last year free of charge as foreclosure issues, bad refinances, and credit-card debt have bloomed nationwide. Dahlheimer has seen his workload double since the crisis began in 2006.

Dahlheimer points to one reason for the financial collapse: financial markets that went into a feeding frenzy as regulations fell away. “We’ve been fetishizing free markets for the last 15 years to the detriment of the consumer and families and stable communities,” he says. “We have favored capital over labor, we’ve favored credit over debting, and we’ve allowed the inflation to happen in the financial system with our full blessing with companies based on fundamentally unsound lending practices.”

Dahlheimer sees those unsound lending practices play out into reality every day. He sees people living on the the edge or upside-down in loans for homes that have become more than they’re worth. He sees people stuck with new subprime products, like H&R Block’s refund anticipation loans, payday title loans, and paycheck-advance loans that often come with hundreds of percent in interest. Here in Minneapolis, new payday lending stores are popping up on street corners every month.

“We have allowed financial structures to create all this jeopardy,” Dahlheimer says. “But it plays right into the financial culture of never saying no to ourselves and having no responsible leadership over thrift, stewardship, and sacrifice.” Indeed, in the current administration, the national debt has doubled. Eight years ago it was $200 billion; today it’s more than $400 billion.

Now, as the Bush administration asks taxpayers to pay for the Wall Street bailout, consumers are starting to fight back. Lawmakers report receiving hundreds of emails a day asking them to vote against the bailout. A group of people in New York are planning to, literally, dump their junk on Wall Street in protest today as lawmakers meet and try to swiftly get a bill through with little time for real consideration as Bush touts “panic” as a reason to act now. And here in the Twin Cities, a group has scheduled a protest in Lowertown St. Paul this afternoon and another plans to gather in front of the Federal Reserve Bank on Hennepin in Minneapolis.

“It’s not so much that it’s $700 billion big,” Dahlheimer says of the bailout package. “It’s not so much the size of it, but the fact that no accountability is being asked for. That’s the real problem here. And until that happens, nothing will change.”

How we got here and the politicizing of the free market

As the last eight years have brought more government control over individual freedoms like a woman’s right to choose, same-sex marriage, and privacy issues, a deafening “less-government” rallying cry has been the trademark of this administration and its supporters. And while the deficit and spending have actually increased, the government-get-out-of-my-pocketbook concept has taken form in the politicization of government regulation of the market place.

And it was the lack of regulation and freewheeling grab-and-go greed that opened up the market for fraud and failure. In 1999, the Glass-Steagall Act was repealed and replaced by the Gramm-Leach-Bliley Act, which was signed by President Clinton. The act replaced a New Deal law that prevented commercial banks from blending with investment banking because that very lending was the main source of the great crash of 1929 and the resulting Depression.

What’s more, mortgage brokers were specifically written out of the law for fidiciary duty of care, a law that creates standards of equity and consumer rights and ensures, say, agents for products like insurance do not sell grossly inappropriate packages to someone. Yet mortgage brokers were able to wiggle out of that responsibility, and in 2003, at the height of subprime lending, were selling no-doc loans, balloon loans, and liar loans at rapid speed. Last year, Minnesota passed an anti-predatory lending law that required stricter requirements for brokers. And many of them fled.

Dahlheimer says it’s the politicization of the free market that helped to create the crisis, and in keeping it unregulated the market will continue to serve the wealthy and hurt consumers. In other words, it’s that kind of backward, zero-regulation thinking that will socialize debt and privatize wealth.

“Free-market capitalism must be seen for what it is: a wealth-creating engine which, without regulation, chews up and spits out consumers and people and families,” Dahlheimer says. “With regulation, it’s the best wealth-creating engine invented. To me, free market is an interesting concept in balance with the moral prohibition against usury and ruin. Which is why we have regulation as oil in the great engine so the engine doesn’t seize up and blow up.”

Dahlheimer says the problems today are not about a “free” market, but an unregulated market. “In essence, you know the doors that slam shut in commercial hotels so the whole place won’t burn down if there’s a fire? We took away all of those doors that slam shut in the ideology of a completely unbridled market. And the whole house is on fire.”

Going debt-free? Consumers fight back

Marne Gerdes has been working two jobs in the last two months to make ends meet. She’s a single woman, and doesn’t have a ballooning or subprime mortgage, but with food and gas prices increasing and a job in the western suburbs–a 20-minute drive from her Minneapolis apartment– paying her student loans, credit cards, and car payment has become more of a burden. Gerdes says thinking about using any of that money to pay for the bailout angers her to no end.

“It’s not the taxpayers’ responsibility to fix that problem,” she says. Not only is she worried about her tax dollars paying CEO salaries, but news of the bailout has also made her rethink how much she gives the lenders in the form of interest payments. “It makes me think differently about debt and my own spending and credit balances,” she says. “My mentality is to try and move towards paying in cash and not using credit as much as possible.”

Her friend Courtney McLean agrees. She’s been on a credit-payoff plan for two years. “I live without most of the time,” she says. But for McLean, it’s better than the alternative. “To me, debt is systemic slavery. And I don’t know if I’ll ever feel differently about that.”

They aren’t alone. For the last few years, anti-debt and mass consumption movements like Simple Living and anti-“affluenza”--an affliction of debt caused by an obsession with material goods and keeping up with the Joneses– have grown, spawning best-sellers and groups nationwide. The Simple Living movment has a monthly simplicity meeting in Rochester, Minn. every third Monday. Issues such as permaculture (using less of the Earth’s resources), living green, and living debt-free are explored.

McLean says her experience with debt in the last few years and ubiquitous Wall Street greed has made her an adopter of the Simple Living lifestyle. “I love money as much as the next guy,” she says, “but the weight and importance we put on it and its related subcultures, such as consumerism, allows for people to become trapped. We are not taught as a culture to understand and respect the fluidity of money. Our nation is built on the very weak foundation of debt; and like parent, like child, many citizens of our nation are personally in debt as well because we have to have this or that and ‘everyone’s in debt.’ Debt that is allowed to accumulate, as opposed to credit that is paid of promptly, is good for no one except for the companies collecting on that interest and the parties associated.”

Dahlheimer says he counsels consumers on similar issues of living debt-free. And because of the cycle that  bred debt and corruption, he says it’s time lawmakers start relying on moral principals as True North, and that any sort of  bailout also involve economic justice for those consumers. “There were certain common moral principles that Judeo Christian and Islamic beliefs have in common, and that’s the prohibition of usary,” he says. “And the way I heard it phrased was that people of great wealth must not be allowed to use great wealth to ruin others who lack that same advantage.”

Of course, the last decade or so of unchecked markets and imprudent lending practices flies in the face of cardinal rules of “moral values” and instead speaks to the free-market fundamentalism that privatizes profits for the very wealthy and socializes debt for the rest.

Yet Dahlheimer hopes the crisis has a silver lining. He hopes the resentment spurs a cultural shift similar to one that happened during the Great Depression. “It means legislators agreeing to balance budgets each year instead of create debt to pass it on for a generation or two or ten. It means individuals accepting limits and redefining patriotism from the most spending I can do, to living with in my means. And it also means at a larger level creating protective structures so that greed cannot exert a winning force in the market place.”

Having it any other way, he says, is like bailing out the drunk again and again. Now is the time, he says, to enact change. “Minnesota is the home of chemical dependent treatment,” he says. “One of the concepts out of the Johnson Institute was the concept of enabling. Enabling is when you inadvertently keep bailing out the alcoholic in a way that continues their alcoholism because they never hit bottom. And that’s exactly what we’re proposing with a zero oversight nationalized bailout of wealthy investment firms.”

He add: “Basically, it’s like saying, I can’t let Uncle Joe go to treatment because I need him to drink and drive me to work. And that’s not really a winning formula.”

The media keeps getting Rep. Michele Bachmann’s home state wrong. Last week it was a Tennessee TV news Web site reporting that U.S. Rep. Michele Bachmann (R-Minn.) represents New Mexico. Today at Human Events’ national, hip-conservative news site, political editor John Gizzi misplaces her — this time in a southeasterly direction, labeling Bachmann as a member of Florida’s congressional delegation.

Besides again laying Wall Street’s woes at the feet of the the Community Reinvestment Act, Bachmann tells Gizzi that Treasury Secretary Henry Paulson couldn’t assure her that his bailout plan would avert (in her words) “economic Armageddon.”

But since that hasn’t come to pass quite yet, there’s still time to consider a question: What’s the hidden Bachmann-Florida connection behind this latest slip-up?

It could be Bachmann’s one-time status as Minnesota’s answer to former Florida Secretary of State Katherine Harris, but Harris seems a less likely culprit since Bachmann became Minnesota’s answer to Alaska Gov. Sarah Palin.

It could have something to do with the house in Florida that Bachmann’s patron-in-the-pulpit, Pastor Mac Hammond, bought with the take from the collection plates at his Living Word Christian Center.

Or it could be Bachmann’s eagerness to drill for oil off the Florida coast (YouTube). In another staged-managed video address, Bachmann gets so excited about drilling she makes her own slipup, claiming the country’s failure to “drill here, drill now” to her satisfaction is the fault of the ”American-controlled congress” — a gaffe that the video’s sponsors apparently didn’t notice or bother fixing.  (It’s at the 0:48 mark of this video.)

Purely as a question of self-interest, John McCain’s exit-the-stage gambit makes sense. With cries of impending doom filling the air, he had nothing to gain by sticking around to discuss a subject he ill understands, all the while being pelted with quotations of the Hoover-like things he’s already said and done during his long tenure as a cheerleader of financial deregulation. On Monday of last week, McCain proclaimed the economy “fundamentally strong” even as Wall Street’s latest and gaudiest blowup was unfolding. Since then he’s faced erosion in the polls day after day.

There are those who think the real point of McCain’s whole exercise is to can the vice-presidential debate between Sarah Palin and Joe Biden, but that’s a grace note if it happens, far less urgent than McCain’s own immediate need to find a pretext for disappearing until a bailout is done and the acute phase of the crisis seems past. The ploy also serves the larger Bush administration push to get a deal through Congress with a minimum of reflection and revision, as they so spectacularly succeeded in doing with the Patriot Act and the Iraq War resolution.

But if McCain’s move makes sense for McCain in a narrow and craven sense, the implicit (and sometimes express) embrace of it by news media and the opining classes is a measure of how theatrical and unserious our politics, and especially our presidential campaigns, have become. There’s a political issue of grave consequence at hand? We must cancel politics at once!

The economic crisis on Wall Street is fundamentally a political crisis. The decisions being weighed now, about how to intervene in the economy to keep it from lurching to a halt, and how to minimize–or maximize–the long-term losses to the public at large, will shape the country’s options for decades to come.

We are already vastly in the hole from an Iraq War tab that Nobel economics laureate Joseph Stiglitz estimates at an eventual $3 trillion. If the Paulson plan is adopted substantially as proposed (with no provisions, or just token provisions, for recapturing bailout funds from future financial sector profits), that additional debt will guarantee that for practical purposes, only two lines exist on future federal budgets: the Pentagon and debt service. In fact, we are already facing a domestic future that’s drastically circumscribed by Iraq War debt, but that’s hardly a reason to double down.

The enormous national debt functions in part as a political tool, a lesson the Republicans learned a generation ago. After David Stockman, Ronald Reagan’s budget director, got over his initial disappointment at being unable to make deeper cuts in federal spending, he came to recognize that the political payoff of supply-side economics lay in the future, when accruing deficits would compel the dismantling of spending programs that were too politically popular to do away with under less dire budgetary circumstances. If Henry Paulson and friends sell this bailout with no consequential payback provisions, it won’t matter whether future presidents and Congresses continue to subscribe to neo-liberal austerity policies in principle. They will have no choice in the matter, because they will be broke.

In theory this is a moment of great potential for the Democrats, not just for purposes of this election but for reclaiming a popular constituency distinct from that of the Republicans. Apart from the half-a-loaf Dodd Plan — which, make no mistake, seems unmistakably superior to the Paulson heist — they have had remarkably little to say about the remedies for a crisis they ought to have recognized as a real election-season possibility.

Barack Obama’s refusal of McCain’s bait was one of the more gratifying things he’s done in this campaign. It was heartening to hear him say that now was emphatically not the time to stop talking about political solutions. There’s no question that Obama has seemed far more measured and presidential than the erratic, dithersome McCain — but who wouldn’t? Obama’s list of conditions for a bailout deal were quickly parroted in essence by McCain, and both amounted to affirmations of what internal dissent in Congress — driven in large measure by intransigent House Republicans — had already made an accomplished fact: On its own terms, the Paulson plan wasn’t going to fly. Finally even George W. Bush said as much last night.

Like the Iraq War, the financial crisis is being framed not as a debate over national direction but one over managerial competency. And managerial competency, vitally important as it may be, is not really a political issue. It is a subject that engenders discussions about the best means of executing a policy, not deliberations over what the policy should be. To the extent Obama and the Democrats accede in this — to the extent their actions suggest only that Obama would be a more responsible manager of crises like the present one — they are taking the politics out of politics, too.

The U.S. Secretary of the Treasury made that demonstrably true statement during a radio interview last February in which he dissed the one-cent coin, calling it costly to produce and saying he’d do away with the lowly penny if its demise were “politically doable.”

Paulson may yet have his way with Congress when it comes to trillion-dollar checks, but on Monday Congress scored a symbolic victory over penny-haters like Paulson when Paulson’s own U.S. Mint announced four congressionally authorized new designs for the back side of next year’s new pennies.

Designers have readied images representing four stages of Lincoln’s life — but not, inexplicably, for a planned fifth in the series showing Lincoln’s role in preserving the United States of America “as a single and united country.” The delay does not, it can be hoped, reflect a cautious approach on Paulson’s part to stamping into good copper what could, in a near, post-financial meltdown future, be an obsolete theme.

Four years ago, when Congress passed the bill to put five stages of President Abraham Lincoln’s life on the back of the penny, the director of the Abraham Lincoln Bicentennial Commission gushed that it would “delight Americans as they go about their daily transactions.”

Now that Paulson’s pronouncements have them pinching pennies with daily-increasing desperation, Americans may indeed take delight wherever they can — with even Honest Abe’s humble log cabin looking pretty cush to the growing legions of the laid-off and the foreclosed-upon. But given Paulson’s anti-penny proclivities, any such delight would probably strike him as irrational exuberance.

Also included in the 2005 new-penny legislation is a series of $1 coins commemorating U.S. presidents that’s already underway, along with a companion series of $10 gold coins commemorating their wives (or Lady Liberty for presidents who lacked wives), with designs on the flipside highlighting something from the First Ladies’ lives.

The “First Spouse” series (as it’s called in apparent deference to future First Dudes) makes converting one’s life savings into gold much handier for those of modest means. It also looks back to an ancient Roman tradition going back to Cleopatra and Livia, the (second) wife of the emperor Augustus. Oddly, looking forward, the Mint’s schedule has the ”First Spouse” series ending with Pat Nixon, while the presidents will run through Gerald Ford — in avoidance of a Betty Ford Clinic design, perhaps?

It’s a shame, because at least two potential future First Spouses seem to be all ready for their star turns in gold.

Every hour of every day brings reams of fresh news reports and commentaries on the Wall Street crisis and the competing bailout proposals wending their way through Congress, but that doesn’t mean you can learn anything from most of them. David Cay Johnston, the great NYT reporter and author (Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super-Rich and Cheat Everybody Else; Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With the Bill) who has done more to illuminate the flim-flammery at the heart of the US tax code and Wall Street’s post-Reagan machinations, offered this warning to journalists yesterday:

In covering the proposed $700 billion bailout of Wall Street don’t repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don’t assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don’t assume there is a case just because officials say there is.

The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors.

The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

Ask this question — are the credit markets really about to seize up?

If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

Here are links to some of the most prescient and on-point analyses of the past several days, starting with Treasury Secretary Henry Paulson’s no-strings-attached bailout plan.

THE PAULSON PLAN

Text of the Paulson proposal

Glenn Greenwald, “The complete (though ever-changing) elite consensus about the financial collapse” (9/20)

Glenn Greenwald, “Growing right-wing opposition to the Paulson plan” (9/22)

Glenn Greenwald, “Interview with Notre Dame finance professor Richard Sheehan” (9/23)

William Greider, “Paulson bailout plan a historic swindle” (9/19)

Michael Hudson, “The Paulson-Bernanke bank bailout: Will the cure be worse than the disease?” (9/22)

Sean-Paul Kelley, “Text of the bailout is authoritarianism at its worst” (9/20)

Paul Krugman, “No Deal” (9/20)

Paul Krugman, “Balance Sheet Baloney” (9/23)

Robert Reich, “The bailout to end all bailouts” (9/23)

THE DODD PLAN

Text of the Dodd plan (PDF)

Bloomberg News, “Dodd proposes giving US equity stake for bad debt” (9/22)

TalkLeft, “Follow the Lobbyists: They Strongly Oppose the Dodd Bill” (9/23)

THE PRESIDENTIAL CANDIDATES’ RESPONSES

NYT Caucus blog, “Obama Says Bailout Should Include 4 Conditions” (9/23)

WashPost Trail blog, “McCain Lays Out Bailout Principles” (9/23)

FOLLOW THE MONEY

Bill Allison/Sunlight Foundation, “Financial Bailout: Who’s minding the store?” (9/23)

Bill Allison/Sunlight Foundation, “Financial Bailout: Who does Dodd see at his fundraisers?” (9/23)

Bill Allison/Sunlight Foundation, “Financial Bailout: Who does Shelby see at his fundraisers?” (9/23)

Bill Allison/Sunlight Foundation, “Financial Bailout: Who does Bachus see at his fundraisers?” (9/24)