Paulson's Treasury, Continued Inaction

PAULSON FIDDLES WHILE ROME BURNS

Another week passes, and nothing done at Treasury to combat preventable foreclosures.

Sure, JP-Chase announced a voluntary plan, one with no GAO accountability, no reporting, no audit, no ... urgency, even? Did the other major lenders follow? BOA? Not that I saw, did you?

Accordingly, the "balance sheet" cycle continues. The bond-insurers have not received anything, and get downgraded. AIG is now consolidating its losses at another $40 billion highe, up to circa $170B, now, including two mop-up vehicles (!), CP access via the Fed, a TARP infusion, "bridge financing", and a partridge in a pear tree.

Why we want to continue to deal with this problem solely through the banks and non-targeted, broad-spray "fiscal stimulus" is beyond me, so long as there are direct-action plans to consider, even a ideas to creatively remake the mortgage market (the Danish model?), so that it can handle price swings in the future more adeptly.

Even if you are a die-hard TARPer, why are the bond insurer's not being delt with in a summary and quick fashion? Have we unwound the entire "synthetic CDO" problem, yet?

THE "PUBLIC DEAL SHEET" - COUNTRY FIRST, OF COURSE

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Remember when Paulson's go-to guy release a "public deal sheet" for the TARP, a term that was natural to him, but laughable in context, right?

Well, it turns out there may have been major bones thrown to their own, in the details:

The change to Section 382 of the tax code -- a provision that limited a kind of tax shelter arising in corporate mergers -- came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.

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