Loose Ends... Vol. XXII

Holy Blagojevich!

I've intended to write about the Rod Blagojevich situation for a while now. A few weeks ago, over the Thanksgiving holiday, my brother, an Illinois resident, was in town. We actually had a conversation regarding the corruption and arrogance of Blagojevich as we read his Wikipedia entry and discussed the news which swirled around him. This was before the current scandal. Funny.

Anyhow, Blago had his first press conference since the charges were leveled against him. Wow! This man is something else. I think that he must have some information that he can either use as leverage in negotiations or that will take down someone big with him. Maybe not... he might just be a bit crazy. Either way, this will be interesting to watch. In terms of Chicago politics, I'd be shocked if there isn't at least some embarrassing dirt on Obama. We'll see...

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President Bush again showed his arrogance by performing an end-around on Congress and giving GM and Chrysler emergency loans. Technically, this was not illegal since they used the EESA/TARP funding - although, I'm not convinced that was constitutional in the first place.

I continue to find the terms of this loan interesting in that the funds can be called back if proper restructuring does not take place or long-term viability is not evident. But, it is my understanding that these loans are necessary to fund basic operations and debt repayment. Once they get these loans, the money will be spent. There won't be anything to get back.

The most interesting thing about this story is that Paulson will now ask Congress to release the last $350B installment of the EESA/TARP funds. On December 10, Neel Kashkari testified before the House Financial Services Committee and was asked explicitly if the funds would be requested. He, of course, danced around the question. Congress is adjourned for the holidays. Once Paulson requests the funds, Congress has 15 days to pass legislation to block the funding. Otherwise, the money is released.

After Kashkari's testimony on the 10th, Paulson appeared on CNBC for an interview. He stated that the Treasury Department had no plans to ask for the remaining $350B. This is after GOP Senators blocked the auto bailout legislation. This is after Bush stated that the White House would act. Paulson had to know that TARP funding would be used at that point. He would have known that giving GM and Chrysler $17.4B would pretty much exhaust the first $350B. Three days after the CNBC interview, he indicates that he will ask for the $350B.

Now, Congress is adjourned. Tomorrow is the 22nd, fifteen days from then will be January 6. The 111th Congress officially starts on January 3, but will not meet until January 6. It might be a bit difficult for them to pass legislation to block the funds.

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The mayor of Beech Grove, IN, an independent city surrounded by Indianapolis, released a statement to city employees this week. They are in the midst of a budget crisis. Discussion can be found here.