bailout

Remember how George Bush, Henry Paulson and other supporters of the $700-billion bailout for banks swore up and down how the taxpayer money was desperately needed so that banks could lend money to main street Americans?

Well, it now appears that's not what the money was really for at all.

The Bush Administration just handed Umpqua Bank, one of the Northwest’s largest financial institutions, $214 million in taxpayer bailout cash.

But as the Oregonian reports :

Umpqua is already well-capitalized, raising questions about whether the institution needed the federal money. "The bottom line is, we probably don't," said Ray Davis, president and CEO of Umpqua Holdings.. Umpqua's Davis said it made sense to accept the money, which will come in handy if the bank decides to buy out a competitor.

The Register-Guard similarly reports :

“We can use it for pretty much anything,” Chief Financial Officer Ron Farnsworth said. “If we need it for lending, we can use it for lending. We don’t need it for that — we have plenty of money for lending (from) deposits. We look at it as an opportunity for increasing our footprint.” What the Treasury is trying to do, Farnsworth said, “is drive consolidation. They want to see the stronger banks acquire the weaker ones.”

So Umpqua doesn’t need the bailout money for lending and won’t use it for that. What it will do is use the taxpayer money to consume smaller competitors, causing big layoffs and making itself too big to fail so Umpqua can then get, you guessed it, more bailouts.

A few years ago environmentalists called for a boycott of Umpqua because some of its biggest owners were old-growth timber barons. After the $214 million taxpayer bailout was announced, those timber barons’ Umpqua stock rose more than 20 percent.

Looks like high price executives are putting the trillion dollar taxpayer bailout of Wall Street to good use. The New York Times reported today:

"A week after the insurance giant, the American International Group, received an $85 billion federal bailout, executives at its life insurance subsidiary, AIG General, held a weeklong retreat at the exclusive St. Regis Resort in Monarch Beach, Calif. Expenses for the week, lawmakers were told, totaled $442,000, including $200,000 for hotel rooms, $150,000 for food and $23,000 in spa charges.

In addition, the former A.I.G. executive who led the London-based
division whose implosion is largely blamed for the insurance giant’s
downfall, Joseph J. Cassano, continues to receive $1 million a month
from the company, on top of the $280 million he received in the last
eight years."

Taxpayers are outraged. Some Congressmen appear outraged. But after hearings showed evidence of similar abuse by Enron, nothing changed.

In the pivotal, tight race in Oregon for U.S. Senate, Democrat Jeff Merkley has gone after Republican Gordon Smith for voting for George Bush's Wall Street bailout.

Here's a new Merkeley ad:

The U.S. Senate is considering passage today of a Wall Street bailout modified to include tax breaks for the wealthy.

The measure includes a provision to reduce the "alternative minimum tax," a tax originally designed to make sure millionaires couldn't deduct away all their taxes.

Citizens for Tax Justice, a leading non-partisan fair taxation think tank, analyzed the impact of a similar AMT elimination proposal in 2006. Here's what they found:

"The 62 percent of all taxpayers earning less than $50,000 would get virtually
nothing—an average tax reduction of $3.

The best off one percent of taxpayers, those making more than $400,000,
would get almost a quarter of the tax reductions—an average of $8,385 each.

The 1/10th of one percent of taxpayers making more than $2 million would get
tax cuts averaging $22,862 each.

The total tax reduction for the 127,000 taxpayers making in excess of $2 million
would be 13 times as large as the total tax reduction for the 85 million
taxpayers earning $50,000 or less."

Oregon's Democratic Senator Ron Wyden was listed as a supporter of the AMT tax cut for the wealthy in 2005.

According to an analysis of a similar AMT proposal by CTJ, 90 percent of the tax cut will go to the wealthiest 20 percent of Americans.

The AMT cut could appeal to conservative Republicans, but it could also increase bailout opposition among Democrats.

“With all the financial problems facing our nation, it’s bizarre that some Senators think our most pressing need is to pass still more tax cuts for the wealthy,” said Robert S.
McIntyre, director of CTJ in 2005.

Local Congressman Peter DeFazio is a national leader of the progressive revolt on Capitol Hill against the $700 billion Wall Street bailout.

He explained why on the House floor: