Sirota on "Bailout Bill"

David Sirota (channeling Naomi Klein and Tom Frank) raises five questions about the propriety of the Bailout Bill over at InTheseTimes.

He primarily raises the issue of lack of oversight/writing an effectively blank check which is hot on some of my listserves. With action imminent, we will see where everything falls when the dust settles.

For my two cents, the major questions beyond oversight are: (1) how will the paper be valued and (2) who are the counter parties who are the actual beneficiaries?

On this last point, take the example of AIG. Apparently it has large losing positions in a large number of credit default swaps. The government is taking an 80% stake in AIG, thus "bailing it out." But who holds the winning end of these swaps???? To me, it seems that these are the people who are being "bailed out" (along with anyone who has retirement money in AIG) as the alternative would be for AIG to go into bankruptcy and let the counter parties try get their money from the bankruptcy trustee. Instead, AIG gets the money it needs to settle the swaps.

The upshot: Who are the beneficial counter parties???