The U.S. Treasury is giving American Express almost $4 billion in TARP funds. Details here. This is appalling. If there is an organization less vital to the the economic viability of this country than American Express I can't name it. This is just so depressing. For what are they going to use the money? Consumer subsidies on $50 steaks at Ruth's Chris? Funding for a new pretentious ad campaign featuring the very special people who are "members?"

What in the world is Paulson thinking? He denied the car companies help and then ladles in out for these idiots, who, as anyone who follows this industry knows, is in trouble because they started pumping cards out to pretty much anybody who asked for one a few years ago, and now they can't collect. What jerks.

Interesting discovery

As you probably know, many wealthy people who enter politics place their financial assets into blind trusts that are managed by a third party who has the authority to buy and sell assets on behalf on the trust owner, but without informing the owner of these transactions. The theory is that if politician A, let's say the Secretary of the Treasury, doesn't know that he owns shares of General Motors that he will be free to make decisions that might affect GM either for the good or for ill, without having to consider what is in his best interest ahead of what is in the country's best interest.

I just learned that to compensate the trust holder for relinquishing control over his finances, he is exempt from paying capital gains taxes on sales made from the trust. Some are estimating that this exemption might provide a tax savings of up to $200 million for Hank Paulson during his tenure as Treasury Secretary. Nice perk, and it certainly makes "public service" more attractive.

Would you lend this man $2300?

This would be your share of the $700 B he wants to use to buy back the bad investments his life-long pals on Wall Street made in mortgage backed securities and other investments they really didn’t understand, beyond recognizing an opportunity for making a easy buck. By-the-way, your spouse and each of your children owe $2300 also. Actually, scratch that; you and I won’t pay anything; we don’t have the $700B so we’re borrowing it. Only your kids, and their kids, will get stuck with the tab. Nice legacy.

I’ve been wanting to write about this for days but who knows what to say? It’s changing minute-by-minute, and the whole thing is unbelievable. Not only is no one taking the blame, the people responsible – financial executives, Congress, and the regulatory agencies – are basically saying, “who could have foreseen such a situation?” Well, I did, for one. Not that I have any expertise or a crystal ball, but the major business books and economic pundits have been warning about something like this happening for years. There were even funny emails in broad distribution about the housing bubble; my favorite was the roller coaster view of housing prices.

So now the guys who got us into this mess want to help us out. It’s not so much a loan as extortion: “Lend us the money – now, without oversight, debate, or controls, no promise of success or payback (but with immunity from future liabilities) – or we’ll have our friends bring down such a financial shit storm on your heads you’ll wish you had.”

Fortunately, it looks like Congress has actually grown a pair since they were last asked to consider anything of importance, and may demand a different approach in which we the people at least get some equity in the firms we’re bailing out. I’m guessing some variation of the plan Senator Dodd put forth will be the final word.

Unfortunately, first we’ll have to listen to a week or two of Congressional hearings in which, Captain Renault-like, they express, “shock!” at the discovery that there was gambling going on below Canal Street.