Now I’ve heard it all.  $700 billion dollars of taxpayer’s hard earned money used to bailout the institutions that created the worst financial debacle since the great Depression. That’s in addition to an $85 billion agreement to bailout AIG, and $29 billion in support that the government pledged in the shotgun marriage of Bear Stearns and JPMorgan Chase. My reaction to the proposed rescue plan is “Stop the Insanity”.

We need to proceed with caution and with deeper regulation during this time of crisis.  We do need to act quickly, but not rashly and certainly with oversight. Henry Paulson, who previously served as the CEO of Goldman Sachs, is asking for an unprecedented amount of money with little or no oversight.  Many are asking that we do away with golden parachutes and salary caps for the executives that helped create this problem. The following list gives you an idea of how these people have been compensated for their performance:

Lehman Brothers Chairman and CEO Richard Fuld Jr. made $34 million in 2007. Lehman filed for Chapter 11 Bankruptcy protection earlier this month.

Bears Sterns former chairman Jimmy Cayne, who was rescued by a $29 billion Fed shotgun wedding to JPM, received $60 million when he was replaced.

American International Group chief executive Martin Sullivan got a $14 million compensation package in 2007. He was ousted in June. AIG received an $85 billion federal bailout.

Countrywide Financial’s founder & CEO Angelo Mozilo,  which has been at the forefront of the subprime fiasco, cashed in $122 million in stock options in 2007; His total take is estimated at over $400 million dollars.

Merrill Lynch CEO Stanley Neal steered them into financial collapse before being taken over by Bank of America; he was given a $160 million package when he left his post last year.

Fannie Mae CEO Daniel Mudd received $11.6 million in 2007. His counterpart at Freddie Mac Richard Syron, brought in $18 million. The Federal government is taking over the mortgage backers with Herbert Allison to serve as Fannie CEO and David Moffett the new CEO at Freddie.

The FBI should investigate all the wrong doers that contributed to the crisis. That includes individuals who falsified mortgage applications so that they could qualify for loans which they could not afford as well as real estate agents, and mortgage companies. The FBI needs to thoroughly investigate institutions such as Fannie Mae, Freddie Mac, Lehman Brothers Holdings, and American International and hold top executives accountable for their part in this crisis.

I question the strategy that Ben Bernanke and Henry Paulson have in mind to purchase questionable assets from troubled institutions.  I realize that Bernanke and Paulson are trying to move quickly to stabilize the market, but haste makes waste.  They have pleaded for maximum flexibility and minimum oversight for good reason, what they propose is inane. During a 5 hour Senate Banking Committee hearing they explained that they don’t plan on buying assets at market value, they propose to buy assets at a “hold-to-maturity” price.   This strategy benefits the banks, not the taxpayers.  What they propose will artificially inflate the market value of the riskiest securities, thereby prolonging the crisis and placing the risk directly on the taxpayer.

Why not learn from one of the nation’s most respected investors, Warren Buffet.  Buffet has said “The government has a great opportunity. If they buy things at market prices with the government’s cheap funding, they should make a lot of money.” Buffet is investing $5 billion dollars in Goldman Sachs Group, Inc.  When he was negotiating this deal do you think he offered to pay a “hold-to-maturity” price?  Are you kidding? He’s buying “perpetual” preferred stocks that pay a 10% dividend. The payout is equal to $1.3 million dollars a day. He also has the right to purchase Goldman common stock at roughly 8% below market value. This purchase gives a needed boost to Goldman as well as Washington’s commitment to come up with a plan.  But the plan Washington comes up with needs to protect the investors, which are the taxpayers, and allow them to pick up assets at a fair market value.

So, the average person, who chooses not to invest recklessly in exotic derivatives and is facing increasing fuel costs this year is being asked to bail out financial institutions that benefited from taking risks. I realize that the entire financial system is at risk and it can not be allowed to fail. A well thought out plan is needed, and soon. However, Congress had better remember that elections are coming up in November. Any rescue plan had better include oversight and conflict of interest policies and truly have the best interest of the taxpayer as its main goal.