What’s good for Wall Street is good for America

To love Geithner’s plan, you have to embrace his philosophy that what’s good for Wall Street is good for America. Under it, bad banks and the bad bankers who run them will get bailed out, bonused up and bankrolled for another roll of the dice at the high-stakes table in what’s called the “legacy securities” program.

Different Casino
This casino differs from those in Las Vegas in that the bank plays with Other People’s Money and if anyone loses, it’s on the house. And oh yes, dear taxpayer, we’re the house. Without even the momentary thrill of placing chips on the table, the taxpayer picks up the tab.
The individual investor can’t play at that table called legacy securities, where toxic assets are rebundled into megamillion-dollar chunks, unless he has a brother-in-law who works at Goldman Sachs Group Inc. or a hedge fund, and maybe not then. You can’t go up to the teller’s window or call a broker and spin the wheel. Easy credit, huge upside and limited downside are for high-flyers only.

The big worry of Krugman, et al., is that the government is kicking the can down the road on pricing these toxic assets for fear of finding too many insolvent banks they will have to take over. That day will come in spite of Geithner’s plan.

Leveraging Other People’s Money got us in the trouble we’re in. A year from now, members of Congress besieged by angry constituents suckered again may lock and load anew trying to do something about the windfall that went to Wall Street while the economy remained frozen for Main Street.

Rooting for Geithner
Still, we’ve got to hope Geithner prevails. In an op-ed in the New York Times yesterday, “Dear A.I.G., I Quit!,” Jake DeSantis, an executive vice president at American International Group Inc., argued that he shouldn’t be hammered for his after- tax $742,006.40 bonus because he wasn’t involved in the toxic credit-default swaps.
Dear Mr. DeSantis: I sympathize — with these reservations. We’re all paying for the sins of others, especially the ordinary American taxpayer with no hope of getting a dime.
The fact you can claim that much money from a company on the brink of collapse is testament that the world is completely out of kilter. The game — not just the collateralized-debt obligations — was rigged in your favor, spinning off enough money to pay elected officials not to regulate you. If it weren’t for the taxpayer, AIG would have gone the way of Lehman Brothers and you would get nothing.

Nice Gesture
It’s a kind gesture for you to give it to charity. But rather than to a charity of your choosing, why not just return it to the taxpayer, or go tent-by-tent in Sacramento passing out your bounty?
Life isn’t fair, as you found out, but it’s more unfair to some than to others. Lots of people are rooting for the guys who got us into this fix because they are the fortunate few designated to get us out. We’ll feel sorry for you when we have an ounce of sympathy to spare.