Bonus Round

Who can keep up with all the four-letter acronyms emanating from the organs of state capitalism these days? Like a bad winter bug, if you work at a "TARP Bank," TARP’s revenge made the rounds today. The House, in a spasm of populist retribution, passed legislation and the Senate considered legislation to punitively tax bonuses awarded to financial workers whose firms accepted TARP funds, willingly or unwillingly, and well, is anyone surprised? m* is not.

TARP was dumb money, perpetual capital at 5% interest plus a puny passel of warrants, as part of a dubious plan, details to be worked out later, for purchasing bad “assets” from banks. In reality it was a $700bn blank check from the Government, gifted in haste to a group of important banks whether they needed it or not, (later expanded to consumer credit firms and automakers) by an unlikely trio of ministers enthralled with the Street and their own savior complexes.

The Street played its part in the con when US markets conveniently swooned upon TARP's initial rejection, then having appropriately scared Congress into reversing its weak objections, rallied upon its passage. A self important Congress breathed a huge sigh of relief for having saved the stock market, and embarked on a surreal and nauseating string of self-congratulatory speeches for the record to empty floors of both houses from legislators with only the vaguest notions of mark-to-market, CDS, or FAS 157, touting their part for the folks back home in saving the nation from collapse.

Granted, after their near death experiences, the management of certain of those lucky (unlucky?) institutions might have been expected to behave more discreetly with the fruits of the fleecing, a bit more congruent with the act of charity dis-enfranchised and increasingly unemployed taxpayers had visited on them. But this is Wall Street folks. Greed and fear are reliably available. Forbearance has always been in short supply. And besides, wasn’t the premise that these institutions (and their bankers) were too valuable to lose?

But where Wall Street went wrong was not in taking the money and running. It was in embarrassing Congress. Having blithely signed over a large portion of the Treasury on a bill they didn’t understand to an industry they can’t comprehend, now "those same folks" (as big O. would say), reacting to public outcry over what amount to personal bailouts for financial employees, are mad as hell that the blank check they wrote was not spent how they wanted and that they didn't know. Wall Street traded securities for cash. Congress traded cash for praise. Wall Street pocketed the cash. Congress, having found praise fleeting, now wants the cash back. Bonus round.