The terrible bailout compromise bill failed and now Congressional leaders will probably rush to cobble together another flawed bill.  Yesterday's killed bill was a disaster from the git-go.

 

And it was manufactured to bailout Wall Street at the expense of regular Ameicans; deliberately ignoring input from progressive economists but obviously absorbing failed Rubinomics.

 

As Rep. Dennis Kucinich stated: "This thing doesn't smell right, frankly...What we have is a transfer of wealth.."

 

Now there is more stink emerging about the reality of the failed legislation.

 

From David Sirota via Open Left: "Micah Sifry has the details of a secret conference call conducted by the Treasury Department with Wall Street analysts whereby our government officials tell their corporate friends that the Democratic-backed safeguards in the bailout bill are a toothless joke.

"Welcome to our Kleptocratic Socialism."

This is what Micah Sifry at Naked Capitalism wrote: "Various readers wrote us, and it was confirmed by a detailed report on the call at DealBreaker, that the Treasury Department held a conference call this evening for analysts on the bailout bill. A memo was evidently sent to SIFMA members; others may have been contacted by other means. But the report I got from one person who was on the call was the the questions came from financial services industry members. In other words, this was most assuredly not intended to be a call open to the public at large. If anyone from the media or other member of the great unwashed was listening in, it was by accident. 

"This is simply scandalous. To have a group of interested parties get a privileged briefing by government officials on a matter of keen public interest flies in the face of what a democracy is supposed to be about. The proper method would either be a published FAQ on the Treasury website or a briefing with the media included. But why should I be surprised? Favoritism has been a staple of the Bush Administration.

"Update: Here are the notes promised. Calculated Risk had put up the conference call number. so some of this is the listener's notes, some are hoisted from CR. They are admittedly skeletal at points, but track and enhance the live blogging report at DealBreaker. You can download a torrent for the call here, which I intend to do post haste and will amend the post accordingly. I've included the long form notes below, but some items jump out:

1. The tranching is a mere formality, and the Treasury boys as much as said so. They could take the $700 billion max as soon as the bill has passed, 

2. However, they do not plan any action immediately, will wait a couple of weeks. They want to focus their efforts on stronger companies but also made noise about protecting the financial system. This, by the way, is the Japanese convoy system all over.

3. There seemed to be a lot of tap dancing about what price they will pay for assets and no straight answer about their policy on warrants. They did say that if the amount sold was greater than $100 million, they would take warrants. FYI, the current draft allows them to pay up to the price at which the assets were initially booked (yikes) . I wonder if this is obfuscation, if they have an idea of what the plan to do but will not admit it in any public forum.

4. As the person who listened to the call stressed, DealBreaker wasn't clear on the bifurcated process. If you come to the Treasury and you are in trouble, you get reamed. Bear/AIG style treatment, execs probably fired. But if you participate on a voluntary basis, the intent is to make it very user friendly. That is consistent with Paulson's position during the negotiations.

5. The exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes. More detail on that point, but I don't need more detail to get the drift of the gist."

Check out the entire Naked Capitalism article for even more information here.

In light of the above, Matt Stoller at Open Left comments on the CEO compensation and restrictions on Paulson as farce: "Despite their shit-eating grins, Democrats nearly got rolled today, but a mixture of luck and bad faith from Republicans saved them.  How do you know that the Wall Street types were trying to steal from us, other than the fact that they said that the refusal to hand over money was akin to a terrorist act?  Treasury officials had a secret conference call with Wall Street executives.  Unfortunately for them, some bloggers were on the call.  The 'Treasury boys' on the call made it clear that "the tranching is a mere formality, and the Treasury boys as much as said so. They could take the $700 billion max as soon as the bill has passed."  That was always obvious.

"And they admitted that "the exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes."  Both of these provisions were 'concessions' sought by Democrats.  Of course, no one could have predicted this bill's 'concessions' to Democrats were farcical.  No one at all.

"This bill was unpopular and hated because the people proposing it do not have the faith of the public to write honest laws or carry them out.  That is the problem, not partisanship or an excess of democracy.  The belief that democratic pressures augur against the public interest is widespread, from Silver to this recommended diary by dansac on Dailykos.

"This is a political crisis, which is why the public is angrily rejecting laws based on Republican demands for a bailout and Democratic concessions which everyone involved at the time knew were a total farce."