It is customary at the end of a president's term in office to hand out pardons to people who are alternatively viewed as either "deserving souls" or "personal cronies." But Bush is already handing out pardons now, and the election hasn't even taken place yet. Oh, but hang on there -- these aren't pardons for criminal acts. They are pardons for financial sins! If you have made stupid financial decisions in recent years that have put you or your company or family at risk, you should start lining up at the payment window. If you don't get in line soon, there won't be any money left to give out!
Pardons granted to date:
- Bear Stearns: $29 billion in the form of federal government guarantees in connection with buyout by JP Morgan.
- American International Group (AIG): $85 billion in the form of a credit facility with the Federal Reserve Bank of New York, in exchange for which the FRB received a warrant consisting of the right to take a 79.9% equity position in AIG.
- Fannie Mae and Freddie Mac: At least $25 billion, believed to be a very conservative estimate, plus at least $100 billion committed to back each company in the event of a shortfall in capital.
- Money Market funds: $50 billion backing to insure the holdings of the funds in the event they fall below $1 net asset value per share (as some did last week).
- The rest of the big money movers: $700 billion at last count, in the form of buying the worthless mortgage-backed securities out of their tattered portfolios.
And as far as I know, the people responsible for nearly throwing the entire world into a depression have not even been sentenced yet, much less have they served any time in jail yet.
References:
Bloomberg News, "'Too Big to Fail' Metric Makes Bank of America, JP Morgan Safer," http://www.bloomberg.com/...
American International Group, Inc. amended form 8-K, http://www.sec.gov/...
AIG Press Release, 9/16/08, http://www.sec.gov/...
NY Times, "In rescue to Stabilize Lending, U.S. Takes Over Mortgage Finance Titans," 9/7/08, http://www.nytimes.com/...
NY Times, "Treasury to Backstop Money Market Funds," 9/21/08, http://dealbook.blogs.nytimes.com/...
NY Times, "Text of Draft Proposal for Bailout Plan," 9/20/08, http://www.nytimes.com/...