(my) money (7) transparency? healthcare (9)

For several months I have been disturbed (angry? mad?) by the several (many more than should be necessary) reports about the shenanigans the banks engaged in with the "bail out" moneys. Reports that the N.Y. Fed. (looms large in Geithner's recent past) was "cooperating" with Neil Barofsky's investigation of what happened to our billions, if he promised not to make their actions public. Ah! They too have something to hide even though, more than private banks that only are supposed to serve their clients, they are public servants.

Some time ago, it had become public knowledge that former Treasury Secretary Paulson's former bank, Goldman Sachs, (as well as a major French and a major German bank) received, in addition to its own bail out billions. a very large payment from AIG's bail out, and action that could not be swept under the tarp. In fact, part of Goldman's repayment of its "bail out" was thus done with $$$ from AIG's bail out, or with the taxpayer's (my!) money. GS also had an arrangement with the French bank under which that bank returned about half of the billions it received from AIG's bail out to Goldman. It is pretty clear that Goldman did not speculate on the bundled mortgages but on the insurance by AIG and documents obtained by the TARP inspectorate suggest that Goldman's demands for payouts by AIG ma have hastened the collapse of the insurer, etc. etc. At the recent hearings, some Congress people were clearly annoyed at the "stale" answers; the typical excuse remains: If we had not... there would have been a collapse, etc. In fact Paulson has a book coming out, called On the Brink (one can "kindle" it). But to me the question is not that there may have been need for a bail out, but why there were no clear and enforceable strings attached, especially demands for transparency, and why the bail out was overseen by people directly or indirectly to the banks involved.

It's nice that there's a 2010 election and that the bail out has made the voters angry. Perhaps those that want to be reelected to their cushy jobs with the wonderful benefits (pensions, health insurance, etc.) they voted themselves (and paid for with our taxes), may want to show their constituents that they went after "Wall Street" (as well, I hope, after such officials as Secretaries Paulson and Geithner (why did Obama ever fall for him, isn't it as bad as McC. picking Palin?). At the hearings they (espec. the Republicans who smell blood and like to increase the dripping to a flow) made Geithner feel uncomfortable, probably because he is too loyal to his former colleagues on Wall Street, but Paulson was treated as he has always been, espec. by Republicans who want to avoid memories of their own Administration's disastrous policies.

No doubt, it's also with an eye on the voters that Obama keeps talking about taxing bonuses, separating speculative banking from consumer banking (again) and what have you and maybe Congress will go along with his MUCH TOO TIMID proposals. (Though apparently the Governor of the Bank of England is in favor of the separation and commended Obama for taking the lead).

About those bonuses: It turns out that City Group is paying out nearly 150% of its profits in salaries and bonuses and (surprise!) is actually booking a loss. In fact more of the profits are paid out in salaries and bonuses than is paid out to investors. And they are supposed to have greater powers of oversight. But then, they live in the same climate of "me first." In the current Congressional hearings it turned out that people who had reservations about the Fed approach to AIG appeared to have been more concerned with the impression the Fed. might create than with the approach itself.

Of course, what also gets my goat is the money spent by lobbyists and special interest adverts, for that money also comes out of my pocket as it is part of the price I pay for goods and services, even when paid for by a union. This time it is the amount so far spent on lobbying for and against Obama's (really Congress') health care plan, namely 648 million dollars plus and additional 200 million on (tv) advertising. This is hardly democracy anymore, though it is more transparent than the hand outs to our elected representatives in spite of the recent ruling by the Supr. Court on campaign financing. My ideal there is not to allow any registered voter to contribute more than a one time $10.00 per candidate, per primary and per November election. It would take a good deal of restraint on the part of every voter, I am sure.

I came across an item that, today, is almost hard to belief. A German scientist by the name of Paul Ehrlich (d. 1915) found a medicament, known as salvarsan, that until penicillin came along was used as a cure for several diseases, including syphilis. At the time he was accused of "intending to make money" off this invention, but a defender said he was already rich enough. Even Americans debated the issue, but eventually agreed that he could take out a patent. Compare this with today when inventions are valued, it seems, only because of the patents that may bring in millions.

Even today other countries do things differently, i.e. more modestly. In France a well paid executive was appointed to run Electricite de France, the French energy company. He was to be paid 1 million euros. He would also to continue to receive his salary from his previous company, which would double his income. An outcry erupted and he gave up his previous job. Then it tuned out that his former company was giving him severance pay and a pension, which again would double his income. An outcry erupted. And all of this about what by US standards is but a measly sum.

As I wrote in an earlier money entry, one could be hesitant to open a newspaper for fear of raising one's blood pressure. Two tems caught my attention because they have both to do with high profits and the heath (hospital) industry. Both are also oxymoronic in that there are profits and losses. One item concerns Humana which made profits on the Medicare Advantage business (government sponsored but privately run) and incurred losses on its commercial segment. The Med. Adv. premiums went up 12% in the last quarter of 2009 to rise to 4+ billion dollars. The other item was about the Hospital Corp of America (HCA). Several years ago it went private and was sold for 33 billion, 5.5 from investors and the rest from banks. HCA needs to pay off 25.7 billion but it announced that it will pay out 1 3/4 billion in dividends to its shareholders (i.e. the shareholders are paying it to themselves). Last year it paid off 1.6 billion of its debt, not from earnings but from the sale of assets. But HCA expects business to improve (but why not wait until it improves?)
The HCA data come from GimmeCredit.