A Lesson

Via The Wall Street Journal, a little lesson from the Wisconsin state Attorney General J.B. Van Hollen to the politicians demanding witch rich hunts. Responding to a letter ”suggesting” state attorneys investigate corporations from Chuck Grassley, Van Hollen wrote back:

“However, I will not be initiating investigations through press releases, nor will I treat all corporate executive expenditures as presumptively wrongful. Wisconsin law certainly does not. Financial institutions (and other businesses) on the verge of insolvency are ill-advised to make unnecessary expenditures, whether to executives or otherwise. At the same time, contractual obligations are generally to be fulfilled, work should earn compensation, and there is no law in Wisconsin making a contract illegal simply because someone is well compensated. Absent specific information indicating a transaction is fraudulent as opposed to foolish, I will not use my office to threaten litigation in an attempt to micromanage Wisconsin’s businesses. Corporate governance is generally a matter for shareholders, not public officeholders.” 

Bravo.  

Here’s the real problem:

Another bit of data that recently became public is a partial list of AIG’s counterparties – including Goldman Sachs, Bank of America, and European financial institutions. Why can’t those companies take “haircuts” and accept some losses? Instead, U.S. taxpayers are being forced to bankroll this effort to the tune of over $170 billion, so far, even as their own 401(k)s shrink and home values slide.

Unfortunately, the collective temperament of most Washington politicians – call them the Bailout Party, a term that includes Democrats and Republicans – includes a fondness for crony capitalism that dates back to the 1998 bailout of the hedge fund called Long-Term Capital Management. Not only is AIG likely to receive more handouts from the U.S. Treasury, but so are other firms that have yet to fail. ….

…….The consequences of these repeated bailouts are immense and historic. As of last month, the U.S. government has risked $9.7 trillion on bailouts, not counting the Treasury Department’s new toxic asset-buying plan. To put that in perspective, the IRS collects only $1.36 trillion a year in individual income tax revenue. (Emphasis added)

Got that? Congress is outspending total income tax revenue by close to a factor of ten. On bailouts alone. It is not a crime for corporations to fulfill legally binding contracts, regardless of how sound their judgment was in signing the contracts. It ought to be a crime when our elected officials are this irresponsible with our money.

Not their money. Our money.