Take the Money and Run

It’s quite nice to be a big bank: you can take taxpayer money and have no accountability.

The FT reports that JP Morgan Chase and Citigroup have announced that they will not participate in PPIP, the Treasury’s plan to incentivize investors to purchase “legacy assets” (i.e. toxic waste).

So let me get this straight:

1. JP Morgan Chase and Citigroup demand bailout money from the Treasury, claiming an impending crisis. The Treasury forks it over.

2. JP Morgan Chase and Citigroup don’t actually, you know, make any new loans with it; instead, they spend a lot of money on anti-union lobbying and bonuses.

3. Congress is outraged and places executive compensation limits on PPIP money.

4. Then JP Morgan Chase and Citigroup say that they won’t participate — thus, suggesting that they really aren’t in that bad of a shape to begin with.

So whom am I supposed to be angrier at? JP Morgan Chase and Citigroup for taking taxpayer bailout money? The morons who gave it to them? Or the Very Serious economics and finance “experts” who insisted that this was all necessary?

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.