Transcripts

"Commentary"-Uncle Sam's Two Sides

SUSIE GHARIB: In tonight's commentary, the two faces of Uncle Sam. Here's Allan Sloan, senior editor at large at "Fortune."

ALLAN SLOAN, SR. EDITOR AT LARGE, FORTUNE: The government is spending tons of money to revive the economy, but a key part of its program doesn't show up on any budget. I'm talking about the way Washington is subsidizing Wall Street, which I define as our big financial institutions, by providing it with very cheap money. It's really interesting. On one level, Washington is bashing the street because people are angry and who can blame them? On a second level, Washington is handing Wall Street huge subsidies by letting it borrow at below-market rates. For instance, plans to get buyers for toxic assets involve very cheap money. That cheap money amounts to subsidies worth $100 billion or so to the assets buyers and sellers, compared to what private lenders would charge, if you could find any. The Fed's trillion dollars of special lending programs involve subsidies of at least $30 billion a year. Then, there's the TARP and FDIC guarantee programs. Finally, the Fed is boosting market values of Treasury bonds by keeping interest rates on them artificially low. Look, I'm not saying any of this is necessarily bad. We need most of those programs, maybe all of them. But to those of us who love irony, it sure is funny. The government smacks big money around in public, but subsidizes it in private. Yet another example of how what the government does is more important than what it says. I'm Allan Sloan.