Bloomberg News has reported some incredible news.  The headline is “Fed Pledges Top $7.4 Trillion to Ease Frozen Credit”. 

That’s not a typo.  It’s $7.4 trillion in bailout cash, that according to Bloomberg, is $24,000 for every man, woman, and child in the United States.   Put in perspective, the article finds that this is the equivalent of half the value of everything produced in the U.S. last year—half the value of every house built, every car manufactured, every ad placed in the newspaper or served on the Web, every bag of groceries bought, every custom piece of glass cut by the local hardware store: half of everything. 

Your tax dollars at work.  And now we’re hearing about $325 billion in bailouts and loan guarantees for Citibank.

This is one more reason for legislation like that which I introduced last week to cut the $700 bailout in half.  (A bailout plan that I opposed from the start).  But this article also demonstrates the need for Congress to take a serious look at the financial activities of the Treasury Department, the Federal Reserve, and the FDIC.

Bloomberg has the context:

Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.” 

And the rough breakdown of the $7.4 trillion, according to Bloomberg News:

“Bernanke’s Fed is responsible for $4.4 trillion of pledges, or 60 percent of the total commitment of $7.4 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago…

The FDIC, chaired by Sheila Bair, is contributing 20 percent of total rescue commitments. The FDIC’s $1.4 trillion in guarantees will amount to a bank subsidy of as much as $54 billion over three years, or $18 billion a year, because borrowers will pay a lower interest rate than they would on the open market, according to Raghu Sundurum and Viral Acharya of New York University and the London Business School.

Congress and the Treasury have ponied up $892 billion in TARP and other funding, or 12 percent.

The Federal Housing Administration, overseen by Department of Housing and Urban Development Secretary Steven Preston, was given the authority to guarantee $300 billion of mortgages, or about 4 percent of the total commitment, with its Hope for Homeowners program, designed to keep distressed borrowers from foreclosure.

Any way you slice it, this is taxpayer money.  Your money is being used to pick winners and losers and string along entities that made terrible business decisions.  It must stop.

Yesterday I introduced legislation that essentially will cut the $700 billion bailout in half.  This measure (H.J. Res. 101) disapproves of the second half of the bailout funding, which must be requested by the president (whether Bush or Obama). 

If passed, this measure will save taxpayers $350 billion and significantly reduce our future national debt.

Media General reports:

Rep. Virginia Foxx, R-N.C., introduced a bill Wednesday to cut in half the $700 billion Wall Street bailout package.

Under the program, which was designed to shore up the financial system by allowing the government to purchase toxic mortgage-backed securities, the Treasury Department has injected nearly $290 billion into troubled banks.

If Treasury wants to spend more than $350 billion, it must submit another request to Congress. If that happens, it would trigger a vote on the legislation introduced by Foxx, which would deny that request.

I also penned an op-ed for Human Events yesterday, explaining just how this legislation works and why it is necessary:

The whole bailout concept is now completely different than the bailout that was sold to America back in September (a concept I didn’t buy in the first place). After this bailout “bait-and-switch,” why should anyone believe that the next round of $350 billion in taxpayer money is necessary or even that it will be used judiciously?

With this question in mind, I thought it was time to exercise one of the checks and balances in the bailout law. The bailout law gives Congress the power to “disapprove of” the second half of the $700 billion in bailout cash.

Treasury was allowed to use $250 billion in bailout funds upfront and another $100 billion kicked in when the President requested additional funding. Now $350 billion is in the hopper waiting for the next industry or company the government deems “too big to fail.”

Congress can stop the madness. According to the new bailout law, Congress can withhold the next $350 billion of the bailout within 15 days of when the President — whether it’s Bush or Obama — requests the second half of the money.