Schock Calls for Exit Strategy on Government Bailouts in the Wake of Outrageous AIG Executive Bonuses

Washington, D.C. – In the wake of the news AIG has awarded executive bonuses totaling $165 million, Congressman Aaron Schock (R-IL) issued the following statement:

“The recent revelations that AIG is using taxpayer dollars to award $165 million in executive bonuses are simply outrageous. Taxpayers are not receiving an adequate accounting from the Treasury Department or from those companies receiving taxpayer funds. My amendment to H.R. 384, the TARP Reform and Accountability Act, would have established a website to track these funds. Unfortunately, the Senate has thus far failed to consider this legislation. This news regarding AIG executives receiving egregious bonuses, while leaving taxpayers to continue bailing out these firms, is the clearest example of why an exit strategy from this government involvement in private business is essential. I believe the Administration and Congress should recover these bonuses by any means and present taxpayers with an exit plan as soon as possible.”

Stock markets around the world on Monday jumped higher after governments took a series of aggressive steps to address the global financial crisis.

Stocks in Europe were trading up and key markets in Asia closed higher.

“It looks like we’re going to have a nice relief rally today,” said David Buik with BGC Partners in London

And the U.S. stock market is also expected to rally today on news the government is planning to actually buy into some of these banks and turn on the loan spigot and possibly end the credit crisis.

And of course, once the crisis is over, and the makers of bad decisions have been protected from the effects of their bad decision making, all these governments all over the world will gleefully surrender all this power they have accumulated.

Heh.

The basic argument for the bailout is that the banks are filled with so much bad debt that the banks can’t trust each other to repay loans. This creates a situation in which the system of payments breaks down. That would mean that we cannot use our ATMs or credit cards or cash checks.

That is a very frightening scenario, but this is not where things end. The Federal Reserve Board would surely step in and take over the major money center banks so that the system of payments would begin functioning again. The Fed was prepared to take over the major banks back in the 80s when bad debt to developing countries threatened to make them insolvent. It is inconceivable that it has not made similar preparations in the current crisis.

In other words, the worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks. The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money. In other words, the banks have a gun pointed to their heads and are threatening to pull the trigger unless we hand them $700 billion.

In other words, let the system run it’s course. There will be some suffering, but the mechanisms already in place will keep us out of the 2nd Great Depression that we’ve been warned about.

Frankly, I think a little suffering just might be the lesson we need to teach us the folly of interference in the free market for the purpose of establishing economic parity among citizens.

Whether you supported the war or not, the complete lack of alternate voices in much of the reporting of America’s newspapers should cause you concern.

Many critics of the war before and since have referred to Bush’s push for invasion as “the rush to war.”

That phrase echoed through my mind much the past week as Bush and Congressional Democrats hastily set to work on a $700 billion bailout of New York’s financial institutions. It is no stretch to call it a “rush to bailout.”

Blogger Jeff Jarvis looked at the (minumum) $700 million billion financial company buyout and made an informal list of some of the things the United States could have bought instead with that money. His list:

• Give 3.5 billion One Laptop Per Child machines for every Muslim child and every child in China
• Free broadband access for every American for 20 years, or take $5 to $14 billion and build a nationwide WiMAX network.
• Free private college educations for 4.4 million people, or free public school educations for 26 milllion people.
• Triple America’s research and development spending.

All these these would make America vastly more competitive, or would improve the world’s understanding of us, and improve the business environment. Instead, we are going to be uncompetitive by rewarding companies that make bad business decisions.

We’ve spent decades behaving like crackheads. And the government’s solution is more crack.