Cure for the Common Bonus

Obama wants more oversight over bad food and bad finances.

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President Obama has plenty of oversight in the food and finance sectors. But the Government Accountability Office worries oversight is exactly what’s lacking as Treasury Secretary Timothy Geithner announced a well-meaning cash injection for small businesses. At the end of the day, Obama scores a 47 on the Change-o-Meter.

Obama is beating the populist drums again, directing Geithner to use all his powers to block $165 million in bonuses that AIG, buoyed by billions in government support, plans to pay its employees. AIG says it is contractually obligated to make the payments, and Obama was careful to request that Geithner pursue “every single legal avenue”—emphasis the ‘Meter’s—in blocking the bonuses. The ‘Meter offers an enthusiastic 15 points for the efforts to curb profligacy by companies on the government dime but is on the lookout for any solutions that get legally funky. There was enough of that in the last administration.

This weekend, Obama took a break from all that money talk to take up the sword against killer peanut butter. On Sunday, the president announcedthat to improve the recently dismal performances of the agencies in charge of monitoring food products, he intends to create a food-safety advisory group. Obama also announced his choice of two former health commissioners to lead the FDA. While the ‘Meter is too disillusioned to give out points for seemingly sound nominations—it will get excited when they’re confirmed and have spent a week in office without trouble from the FBI—it awards 20 points for fighting the good fight against gastroenteritis.

Obama’s got a plan to fight illness in the financial market, too, which, according tothe Wall Street Journal, will “include giving the Federal Reserve new powers that include authority to monitor and address broad risks across the economy.” The administration won’t reveal said plan until the G-20 meeting on April 2. But many of the details closely match recommendations by Federal Reserve Chairman Ben Bernanke and Rep. Barney Frank, who chairs the relevant committee in the House. (The verdict is still out on some of Frank’s more radical but prudent suggestions, like giving state attorneys the power to prosecute national banks.) The ‘Meter eagerly awaits a fully realized proposal but in the meantime gives the Obama team eight points for having a plan at all.

Geithner has also announced that $375 million from the stimulus plan will go to the Small Business Administration to raise the federal guarantee on small business loans up to 90 percent, from 50 percent to 85 percent. The administration’s heart is in the right place, given that small businesses were responsible for the bulk of job growth in the last decade—but its eyes aren’t. A GAO investigation revealedthat few participating banks monitor whether their borrowers are actually deserving of the loans. One investigator called the program “nothing more than a large, unregulated pot of money that lenders are going to scramble to get their hands on.” In his announcement, Geithner gave this issue a worryingly brief treatment. The ‘Meter awards 20 points for the important effort but immediately deducts 10 for this embarrassing revelation at the heart of the strategy.

Overseas, European nations betray nervousness over holding former Guantanamo detainees, complaining that the Obama administration hasn’t given them enough information about the individual detainees. Team Obama will have to cough up details about detainees if it still aspires to rebuild alliances around the world and will slide backward six until it does so.

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