It would be hard to find two congressmen more politically opposite than Brad Sherman and Jeb Hensarling.
Sherman is solid Democrat from the San Fernando Valley in southern California. Hensarling is a red-meat Texas conservative protege of former senator Phil Gramm.
Sherman and Hensarling may not agree about anything else.
But the two men have been outspoken in one shared view: that the bailout known as the Troubled Asset Relief Program, or TARP has lacked accountability or transparency from day one.
Both Sherman and Hensarling have been highly critical of the bailout since it began a year ago, questioning the Bush Administration and Wall Street’s relentless propaganda that the bailout needed to be approved immediately, no questions asked.
After TARP passed a year ago, Sherman wrote: “Our economy will not do well in the months to come, and dropping $700 billion on Wall Street is not going to make things much better. But now Wall Street will use the same fear-mongering tactics which were used to pass the bill, to justify the bill.”
Anticipating the giant bonuses that bailed out firms would continue to dole out, Sherman correctly predicted then that the bailout would provide “hundreds of billions of dollars to investors who made bad decisions and Wall Street executives.”
After voting against the bailout, Hensarling wondered: “How can we have capitalism on the way up and socialism on the way down?”
This summer, Hensarling, who also serves as the lone congressional representative on Elizabeth Warren’s TARP oversight panel, said it was time to terminate the program because it had morphed from an ill-defined emergency program into ill-defined free-floating fund to be used however the Treasury Department and Wall Street saw fit.
Meanwhile, the campaign to convince us that what’s good for Wall Street is good for the U.S.A. continues under the Obama Administration.
For example, Treasury officials recently touted the repayment of some of the money doled out to financial institutions, claiming taxpayers were getting their bailout money back and suggesting that taxpayers may actually reap a profit by the time TARP is finished. Hensarling pointed out that the money is not actually coming back to taxpayers, citing treasury Secretary Tim Geithner’s acknowledgment in May that Treasury officials used the repayments as a revolving fund to pay for bailouts for smaller community banks.
Sherman sees more dangers ahead in the Obama Administration’s latest financial reform package, the Resolution Authority for Large, Interconnected Financial Companies Act of 2009, which Sherman dubbed “TARP on steroids.”
According to Sherman, Treasury officials want nothing less than a blank check to fund new economic bailouts. When Sherman suggested to Geithner that a $1 trillion cap on its lending authority might be appropriate, Sherman noted, Geithner rejected it, “insisting that the executive branch be able to respond [to risks to the financial system] without coming back to Congress.”
Writing in The Hill last month, Sherman said provisions of the Obama Administration’s regulatory proposal would favor “too big to fail” financial institutions over other smaller institutions at taxpayer expense.
Specifically, Section 1204 of the act “allows the executive branch to use taxpayer money to make loans to, or invest in, the largest financial institutions to avoid a systemic risk to the economy,” Sherman said.
In addition, Sherman said both TARP and the latest Treasury proposal include “vague provisions under which taxpayers might possibly recover any money lost through a special tax on the financial services industry.”
But Sherman points out those provisions would also favor the “too big to fail” institutions, because the special tax would fall mostly on medium-sized institutions.
The new Treasury proposals also include no limit on executive compensation or other special oversight provisions that might assure some level of accountability, repeating the same mistakes the previous administration made with TARP.
Meanwhile, the government still won’t tell us how they spent all the money from the bailout.
Sherman and Hensarling’s sharp questions – from opposite ends of the political spectrum – show that the issues of transparency and accountability stemming from the financial crisis cross party lines.
People and politicians who disagree about everything else can agree that we should have a financial system that works for us, not just for Wall Street; that doesn’t work in secret as if it were a CIA clandestine operation, and that provides opportunity for everybody, not just for the privileged few.