Sanford's call for accountability

News from Washington this week amply bears out Gov. Mark Sanford's warning on Monday that "the federal government and, by extension, taxpayers are being gamed." The governor is no supporter of the sweeping bailout of the financial sector, which continues without an apparent end in sight.

Even those who disagree with the governor on the wisdom of the ongoing federal intervention should see that he makes a strong case for greater accountability on behalf of the American taxpayer. A massive bailout using public funds shouldn't be business as usual.

For example, some executives of banks that have benefited from the federal bailout have collected big bucks, even as the government props up their companies. In a letter to Treasury Secretary Henry Paulson, Gov. Sanford cites reports of a $125 million bonus to a single Citibank executive.

Meanwhile, executives with American International Group reportedly spent nearly $1 million on spas and hunting trips after its costly federal bailout got under way. The global insurance giant lost $24.5 billion in the third quarter, prompting the Treasury Department to give it a larger, easier loan than originally planned, now totaling $152 billion.

Beyond those examples of blatant excess, the governor lists other troubling indications that the system is being "gamed" at taxpayer expense. For instance, bailout money apparently will be available to healthy local banks. And the governor contends that one South Carolina bank moved up the retirement of its chief executive so he could get his $18 million golden parachute before the bank applies for federal help.

Altogether, banks getting federal funds reportedly plan to pay their executives an estimated $40 billion as well as dividends to shareholders. Neither is evidence of the austerity that the government, and the public, should expect in this crisis.

It's clear that the bailout hasn't contained the economic disaster. Fannie Mae, the recently nationalized mortgage wholesaler, announced a $29 billion loss in the third quarter and complained that "the mission it was given by the government, to help revive the mortgage market, could be compromised unless the Treasury Department takes new steps to support the company," according to The Wall Street Journal. In other words: Send more money. And domestic automakers have joined the line of corporations with their hands out to the Treasury.

The Washington Post correctly notes that the difficulties of Fannie Mae and AIG underscore "the government's difficulty in intervening in private markets in a way that both protects taxpayers and ensures that the rescue efforts succeed."

Wisdom hard won in decades of experience with numerous bank failures around the world says that when politicians begin allocating capital for political reasons, economies suffer.

Taxpayers should raise a holy fuss when they have evidence of institutions accepting federal rescue funds and not putting the public's interest at least on a par with their business interests.

Even if the bailout is a necessary evil, there's no excuse for making it worse. Stronger controls are essential.