Does $700 Billion Deserve This Much Attention?

By Robert Folsom

As the economic crisis has unfolded, a lot of different financial issues have played their own special part, and most have had their "day in the headlines." But when it comes to sheer volume of media ink and airtime, the $700 billion bailout probably tops the list. Does it deserve all the attention it's getting?

The "$700 billion" figure was conceived immediately after Lehman Brothers collapsed in mid-September, and has remained in the news virtually every day since. This week the focus was on an "oversight committee" that's supposed to hold the Treasury Department accountable for what it does with the $700 billion. That committee managed to issue its first report on Dec. 10, titled "Questions About the $700 Billion Emergency Economic Stabilization Funds."

I actually read the questions and they seemed reasonable enough. Even so, I couldn't help but wonder if this is the first time in history that a committee put 10 questions down on paper and called it an "Oversight Report" -- even before the department they oversee bothered to give any answers.

Historic firsts aside, there's still the question of $700 billion deserving this much attention. The reflexive answer would be "You're bloody right it deserves attention -- that's a lot of taxpayer money!"

And that's true enough -- "a lot" indeed. Then again, the scope of this crisis has helped make certain dollar amounts somewhat, umm, relative...

...Which is to say: Some numbers are bigger than others. The Treasury has supposedly spent only half of the $700 billion, since it became available on Oct. 3. Of course, it's hard to imagine that the printing presses could go any faster anyway.

But wait: The printing presses HAVE been going a LOT faster. The $700 billion is a sideshow, dear reader.

The Federal Reserve has pumped out $1.23 t-t-trillion in the past 12 weeks alone, through their so-called lending facilities. As for "oversight," you may as well imagine instead a big collective horselaugh. There ain't no oversight. The Fed refused a Freedom of Information Act request to disclose the recipients of their lending (which actually totals $2 trillion so far).

So, I believe that "Too much attention?" to the $700 billion is actually the wrong question. The better one is, "Why almost NO attention to TRILLIONS flowing out of the Federal Reserve?" Bloomberg News has been virtually alone in covering this, and is likewise alone in filing suit regarding the Fed's refusal to disclose who the borrowers are.

The "bailouts" haven't helped anyone or anything except the big institutions on the receiving end. The best help you're going to get will consist of what you do for yourself.