Nickels and Dimes for New Orleans, Billions for Banks

It’s a good thing for the bankers that FEMA wasn’t in charge of the bank bailout.

They’d still be haggling over just how much the bankers were entitled to, who was to blame for the fiasco the banks found themselves in, and FEMA would be making the bankers jump through all kinds of bureaucratic rules and regulations for every dime of relief.

The banks would have been left without the vital resources they needed to shovel $32 billion in bonuses to their employees, or the gazillions they’ve poured into their ferocious lobbying campaign to block financial reform.

Too bad for the people of New Orleans that the action team at Treasury and the Federal Reserve wasn’t in charge of recovery after the city was ravaged by Hurricane Katrina.

No doubt the Feds would have scribbled the Katrina recovery plan on the back of a couple of napkins and then leapt into battle, scaring the pants off of everybody with all the frightening and dreadful consequences if Congress didn’t immediately approve what was written on the napkins, no questions asked.

Last week President Obama went to New Orleans for the first time in his 9-month old administration.

He spent four hours there, touting the progress his administration has made in rebuilding the ravaged city. But at a town hall meeting he ran into Gabriel Bordenave, a 29-year-old graduate of New Orleans’ Loyola Law School.

Why is it, Bordenave wanted to know, that “four years after Katrina we’re still fighting for money to repair our devastated city. I expected as much from the Bush administration. But why are we still being nickled and dimed?”

In response, Obama sounded a lot less like the powerful Nobel-Prize winning leader of the Free World than a bureaucrat who’d been caught in the headlights, telling the crowd sympathetically: “I wish I could just write a check.”

Someone in the crowd shot back, “Why not?”

The president responded: "Well, you know, there's this whole thing about the Constitution and Congress, not to mention the fact of the interesting things you find out about being president is everybody will attack you for spending money, unless you're spending it on them. You notice that? So we've got to go through procedures."

Bordenave is no teabagger. He voted for Obama.

After the town hall meeting he said: “I thought it was kind of a blow-off answer. I mean he is the leader of the executive branch.”

Bordenave said after the meeting that he had become increasingly uncomfortable watching the U.S, under Obama’s leadership, spend money in Iraq and Afghanistan while it dawdled on rebuilding New Orleans.[m1]

But closer to home we know that the administration is capable of moving heaven and earth – and the Blue Dog Caucus too – when it has a mind to.

The Obama administration has gone way beyond the initial  $700 billion Troubled Asset Relief Program in opening up federal resources to financial institutions. There are outright loans at cheap rates as well as loan guarantees from the Federal Reserve and loan guarantees from the Federal Deposit Insurance Corporation. In addition, there are the millions that the financial institutions got from the bailout of the troubled insurance giant AIG.

All together, it’s about $13 trillion we’ve put at the banks’ disposal, and even the people whose jobs it is to track how the money is being spent can’t figure out where it went or what is was supposed to accomplish.

Back in New Orleans, the issue Gabriel Bordenave was most concerned about had to with federal reimbursements for storm-damaged institutions. That refers to the federal government’s share in the cost to replace or repair them. One of the most important institutions is the old Art Deco Charity Hospital, known as Big Charity in the city’s low-income Mid-City neighborhood. It was the hospital that treated poor and uninsured residents. Now the city is debating whether to allow Louisiana State University to build a $1.2 billion mega-medical complex in the neighborhood that would cover 35 acres and destroy many homes, or to refurbish the existing hospital, a plan that would cost about $120 million less .

Meanwhile, the feds and the state have been arguing about how to split up the costs.

Sometimes the financial crisis looms so large, it’s hard to grasp the enormity of it. The numbers seem abstract and bloodless, unreal. But then you hear about the haggling over Charity Hospital in New Orleans and it’s not abstract anymore.

If the bankers had taken a little less in their taxpayer-funded bonuses — less than 5 percent —  the federal government wouldn’t have had to haggle over the new hospital at all. We could have built the whole thing. The bankers still would have had most of the money; they wouldn’t exactly be suffering by most people’s standards.

And if the feds had been as tough on the bankers as they’ve been on New Orleans, if they’d scratched and clawed back every penny of taxpayer money that went for the bonuses, how many hospitals in poor neighborhoods could the president be building right now?