Tuesday, December 30, 2008

A New Low for Bush-Paulson: Kiting Checks

The Treasury has already allocated all the $350 billion that Congress authorized for the first half of its bailout program, NYT reports. They have no money left. So how exactly is the Treasury going to fund its latest bailout, $ 6 billion to GMAC?

NYT again:
...even though the Treasury Department has not yet requested the second half of the money, officials said they could provide the financing to GMAC because they have not actually used all of the money allocated for recapitalizing banks.
As Henry Blodgett points out :
This sounds equivalent to writing $1,100 of checks on a checking account with $1,000 in it because only $900 of the checks have already been cashed. In the real world, this is called "check kiting," and it's illegal.
And, keep in mind, as Robert Reich detailed, this is all for Bush to save face and keep the Big Three from failing on his watch, so that the problem is passed on to Obama.

Check kiting to save face, this will really help GW with historians.

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