And So It Goes...

Obama gave a major speech today on his economic stimulus package. While details are still sparse, Congressional Democrats didn't let that stop their criticism. [Note: I was afraid of this...the most notable names among Congressional Democrats have been in the minority for so long, they are having problems understanding that they won the Presidency and control of both houses. It may take a special type of politician to survive in the minority and that that type is unsuited to represent the majority.

Anyhow, while Obama's speech indicated that he is well aware of the seriousness of the current economic crisis and its relationship to the "climate in Washington," Party congressional leaders virtually simultaneously offered additional proof that they do not. Messers. Durban, Schumer, and Dodd gathered to announce a major "breakthrough" in their "negotiations" with Citigroup to change the current bankruptcy laws (changes they all voted FOR a few years ago) allowing bankruptcy judges to restructure mortgage debt on primary residences (including forgiveness of a certain amount of principal). Curiously, the judges have held this power for second homes, vacation homes, yachts, private jets etc., but it was not granted for primary residences. [Note: I suppose the New Economy logic is that a primary home would be located near one's workplace and if you were in bankruptcy, your retirement home (or yacht) would be of more value to you.]

The three Stooges announced that after hard and difficult fighting with the financial industry, they had arrived at an important compromise. Citigroup has "agreed" to include primary home mortgages as subject to restructuring, including principal reduction, IF such mortgages are limited only to those in effect prior to the new law. In other words, they have agreed to support the change solely on a retroactive basis and not for future mortgages.

Ah...this is all becoming soooooo confusing. I use to think the American legal system - ex post facto law as in Article I, Section 10 of the Constitution - prohibited the passage of law retroactively. If so, the Three Stooges' announcement is simply window dressing. By modifying the Three Stooges' bill to apply solely to mortgages made prior to the bill becoming law and negating the modification for mortgages after the bill becomes law, Citigroup has its cake and eats it as well.

Further, why are the Three Stooges "negotiating" with Citigroup at all? The U.S. Government (and consequently, the U.S. taxpayer) is, following the Citigroup bailout of $20B+, the single largest Citigroup shareholder. [Note: Second largest is Dubai with $7.5B.]

Why is it that Congressional leaders continue to play the Emperor's New Clothes game?

Negotiating with Citigroup about the bankruptcy laws is like asking Nazis what they REALLY think about Jews.

It's like finding "good Germans" in 1945 or truly non-sectarian Iraqis in 2009. What the guy in Des Monies, Iowa or Peoria, Illinois understands is that the malfeasance and corruption of the American financial industry ran so broadly and deeply for so long, there are no good guys left.

And, what the Three Stooges need to understand is that this is a situation that is rapidly becoming one of you are either part of the problem or part of the solution and "negotiating" with idiots and/or criminals puts you in the camp of the former.