It is true $2 billion is less than 2% of the total bailout funds the government has been granted. But to completely waste it so that it has no effect on the economy is inexcusable.

This is just what Timothy Geithner and the Federal government effectively did with their aid to CIT group. They did not put in any bankruptcy provisions. The current lenders prior to the Federal Government will likely get 70% of their money back during the bankruptcy process. However, the government is going to lose the full $2 billion having failed to put in writing a contingency in case of bankruptcy. This is a clear case of foolish bailout spending. Spend it if you got it; poof its gone.

Had the government done nothing the end results would have effectively been the same. However, CIT would have gone bankrupt without taking the US taxpayers for $2 billion. If this isn’t gross negligence by the US government, it will be scary what comes next. The government is trying to spend their way out of the recession. It still has yet to be determined if this can effective save the economy. It is well known that at the least it can prolong the de-leveraging. But if they are recklessly throwing money around that isn’t even helping to haul some water off of the sinking ship then we are seeing no benefit at all to this mess.

At this time it is hard to see that the bailout was the right decision. It is unfortunate that the markets scared the public into passing the bailouts without the proper directions for use. It appears that there is too much latitude and haphazardness to how it is used.

It is still possible that the economy may get back on track and that this bailout was critical to that success, but I am not buying it at the moment. As it stands unemployment is over 10% and the GDP has grown as a result of the bailout and more job cuts. Now the bailout may have stopped the market from calamity this year, but it appears to only be a weak band aid for the inevitable which will come in 2010, 2011, or 2012.