A Paper Industry Bailout and Banks’ Bids on Toxic Assets

by Alexandra Andrews
ProPublica, April 3, 2009, 11:20 a.m.

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The Nation has uncovered some tricky finagling by the paper industry: In order to take advantage of a tax credit aimed at reducing dependence on fossil fuel, paper companies have been needlessly adding diesel fuel to their relatively green paper-making process. As a result, the U.S. stands to pay out as much as $8 billion to the ten largest paper companies this year. The Senate Finance Committee says it “plans to closely review the situation.”

Also, the Financial Times reports that Wall Street’s big bailed-out banks—including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase—are considering buying up each other’s toxic assets as part of the Treasury’s public-private partnership. Critics say the banks would be “gaming the system” and artificially boosting prices. But Wall Street execs “argue that banks’ asset purchases would help achieve the second main goal of the plan: to establish prices and kick-start the market for illiquid assets.”

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