President Obama continues to fulfill my prediction that true progressives will be the most disappointed by the man who promised change. All one had to do to see this was look into who wrote his campaign checks:
The Obama Administration insists it wants to “partner” with private investors for its new toxic-asset purchase plan. But the more details that emerge, the more it seems Treasury wants to work with only a select few companies. This is no way to conduct a bank clean-up.
The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as “fund managers” to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we’d have thought Treasury would encourage as many players as possible.
But the bigger shock was when Treasury released its application to become a fund manager, a main rule of which is that only firms that already have a minimum of $10 billion in toxic securities under management can apply. Few hedge funds, private equity players or sovereign wealth funds come near this number. The hurdle would bar many who specialize in the very distressed assets that the Obama Administration is trying to offload from banks.
What? A president favoring a select few on Wall Street? Did we elect a stealth Republican?
If this program is a roaring success, Treasury is guaranteeing that a select group of hand-picked firms are set to reap enormous profits, via a program that was largely underwritten by taxpayers. As it is, smaller players can now only take part in this program if they agree to “buy” into the funds run by one of the exclusive managers. So not only is the government going to be anointing a favored few to invest in these assets. It is also giving those favored few the opportunity to collect fees and profit-sharing from anyone else that wants to go in with them.
As noted above, look at who Obama’s largest donors were. Once again we’ve got the best government money can buy.