Friday, December 31, 2010

Why Wasn't Wachovia Too Big To Fail?

Our old friend Republican The Odious Patrick McHenry wants to know why North Carolina-based Wachovia bank was allowed to die when the Treasury and Fed were spewing out trillions to big banks to keep them going as he takes over the new House subcommittee dealing with TARP.

McHenry, 35, will chair the new Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs when he starts his fourth term in Congress next month. It's part of the Oversight and Government Reform Committee, which Republicans are reorganizing as they prepare to take over the House next month.

The subcommittee is still in its early stages: McHenry's appointment came less than two weeks ago, and the other members have not yet been named. McHenry said there's "a very rich environment for potential oversight hearings," including topics like troubled Freddie Mac and Fannie Mae.

Like other lawmakers, McHenry is sometimes accused of being in lockstep with the banks. Two of his biggest donors are the political action committees of Bank of America and the American Bankers Association, according to data compiled by the Center for Responsive Politics. This summer, he voted against the Dodd-Frank financial regulation overhaul, which imposed strict new rules on banks. But McHenry said he is not on the side of big banking or big government, and that he's willing to ask tough questions of either.

"If there's incompetence on the side of the regulators, I'm willing to point that out," he said. "If there's incompetence on the side of the private institutions, I'm willing to point that out."

He voted against the 2008 bill to bail out the banking industry, saying it was "inherently wrong" to send taxpayer money to Wall Street when families in North Carolina were struggling to pay bills. Instead, he backed a Republican-led alternative that essentially would have been a private-sector-funded rescue plan.

"Certainly we had to deal with the toxic assets and bad investments, the dumb decisions, by some of the significant financial institutions," he said.

He called the original bailout bill, which was passed when George W. Bush was president, a "bipartisan bad deal."

His main concern, he said, are the people caught in the middle, like the small businesses trying to get lending.

So, on one hand he did vote against TARP.  On the other hand, he voted against Wall Street regulation too.  McHenry's game is actually pretty simple:  he figures his "oversight" job means to let the banks do whatever they want to with as little government interference as possible, the standard Republican line on anything.  Government shouldn't do anything at all, as far as the banks are concerned.

Don't kid yourself, however.  He's going to try to stick as much of the financial crisis as possible on the Democrats over the last four years and let the banks walk free to play more Big Casino games.  Keep an eye on Patrick here.  The winger from my old neck of the woods is looking to hit the big time in the 112th Congress.

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