The Bailout Legislation

You Won't Believe Your Eyes

By JAMES F. HENRY

Bull Moose Magazine Publisher

Those of us who are interested in the machinations of the Universe inside the beltway have heard lawmakers level charges about not having the time to read all the details in the monstrous pieces of legislation that goes before Congress. This will not be a problem with the recently filed legislation that is designed to bail out the nation's banking industry from the mistakes they made that has our economy on the brink of collapse.

That was my chief concern when I heard that the Bush Administration was throwing together legislation to address the banking crisis. I couldn't imagine how they could address all the issues that led to the collapse of Lehman Brothers, AIG, Bear Stearns and Merrill Lynch. Now I can see how they did it.

They didn't.

You do not have to have a law degree from an accredited university to read the legislation the Bush Administration sent to Congress and understand what is going on. Just as the Bush Administration seized the opportunity to solidify its power after 9/11, the thief-in-chief is trying to use this latest debacle, which really is an indictment of the Republican economic philosophy, and come out of this with even greater power. Essentially, the administration is seeking $700,000,000,000 that we the people will pay for long after he has left office, with no strings attached.

Don't believe it? I've got the text of the bill that was sent to Congress, along with messages that essentially say, "You better hurry up and pass this because if you don't, we're going to blame you when the s%^t hits the fan."

Draft Bailout Plan

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

What Does This Mean?

When I pasted the text of this law into my word processor, it revealed that the word count of this $700 billion legislation is 870 words. I wrote longer term papers as an undergraduate student in college! Do you know what that means? If we attached a dollar amount to every word in this document, the value of each word would be $804,597,701 and some loose change. That makes the bailout of AIG look fiscally conservative! I can't be the only one who is thinking that Boy George and his Merry Band of Neocons have been abducted by aliens and replaced with aliens whose goal is to run the United States of America into the ground!

So let's take a look at the details of this legislation that is so important that Bush Administration officials urged Congress to pass without amendment. The first provision that really jumps out at me reads:

"(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;"

So what does this mean? It means that the Bush Administration is asking Congress to allow them to hire (and presumably pay) financial agents from many of the same companies the legislation is designed to bail out to make decisions about how this money should be spent.

YOU HAVE GOT TO BE KIDDING ME!

These yahoos in Washington, D.C. must really believe Americans are stupid, or just too lazy to find out the truth before the law is passed. I mean, it was a tremendous miscarriage of justice when Bush and Cheney brought their oil barron tycoons into the White House to set energy policy for their administration (which resulted in skyrocketing fuel costs, mind you.)

Let's see other ways they plan to put the screws to the American public, shall we? Here's another nifty little picture:

Sec. 6. Maximum Amount of Authorized Purchases.

"The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time."

What this means, friends, is that the $700 billion price tag is not really the price tag. It means that if the government buys the defaulted mortgage from a bank, letting said bank off the hook, but then turns around and sells that property, the proceeds of that sale can be put back into the coffers for the Treasury Department to play with again. Depending upon how many properties Uncle Sam unloads, they could create essentially a revolving fund that only the Treasury Secretary can access. Here's another wonderful provision in this law that should send shock waves through anyone who loves liberty:

"Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

This section essentially names Treasury Secretary Henry Paulson the Dictator of these funds, because there is no means of recourse to challenge any decision he makes. To say that the administration is essentially saying, "Trust me," is ludicrous.

What's The Bottom Line?

The bottom line here, my friends, is that there is a financial crisis here, but the legislation the administration has advanced does absolutely nothing to benefit the consumers and homeowners who are suffering. This bill is all about lining the pockets of the entrenched powers, giving absolute authority to the Treasury Secretary who no one aside from the U.S. Senate had the opportunity to vote for, and doing so in the backdrop of a presidential election.

The Republican Party has been in control of the White House for the past eight years. They controlled Congress for most of that time. John McCain was a champion of deregulation, at least until last week when it became apparent to everyone that deregulation in the banking industry is what led to this collapse. And now the Republican Administration wants to have you and I pay for the sins of the Wall Street bankers, while not offering one iota of help to the families that are suffering.

That's how I feel. Anyone care to share your thoughts?

If You Liked This Hub, Here's Another Related Story

Washington Post Columnist Steven Pearlstein has written a column saying that Wall Street CEOs should apologize for their mistakes before getting money from this bailout. In my latest hub on this subject, I explore other ways for the taxpayers to get the most bang for their buck! To read more, click here.

Banking Bailout Poll

Should the Congress Approve The Bailout Legislation, As Presented?

  • Yes! This is just what America needs!
  • No! They're mortgaging the future!
  • I'm not sure....way too complicated for me!
See results without voting

More by this Author


Comments 18 comments

pgrundy 8 years ago

What a mess. Adding to the problem is that Paulson and Bernanke have both lost a lot of credibility in their handling of this problem thus far. So now we are expected to believe they have a handle on it and hand over a blank check? The trust is gone, and the threats of financial meltdown only increase the public's resentment and rage. I think the economy may melt down even with the bill passed, but I doubt it will be passed the way they presented it. There's way too many Congresspersons up for reelection and their phones are ringing off the hook. I think we are all in for a rough ride. Thank you for the hub, especially the reprint of the proposal itself and your excellent analysis.


crashcromwell profile image

crashcromwell 8 years ago from Florida Author

I have to thank a poster on craigslist.org in Maine who alerted me to the location of the legislation. I've emailed my Congressman but have not received a response yet.

As for my excellent analysis, I'll say thanks, but really when you have a bill 870 words long, it wasn't too tough!

Thanks for your comment. We'll keep our fingers crossed that Congress addresses these issues.


jestone 8 years ago

Good job tackling something that is inherently hard to grasp.

J


crashcromwell profile image

crashcromwell 8 years ago from Florida Author

Thanks for your comment jestone!


Nevada Voter 8 years ago

Thanks for posting the legislation.

AND, nice try, trying to pin this on the Republican Party or McCain.

As an Independent/ undecided voter I'd just as soon know the truth.

What I've found so far:

- In 2005 Republican Senators tried to push for REGULATION of the mortgage market, and McCain signed on to this in 2006. I am not sure why it failed, but if you know anything anout how Congress works, it is very possible for the minority pary to stall or kill legislation.

A LITTLE HISTORY:

Wall Street with help of the Clinton Administration pushes for and gets repeal of Glass-Steagall Act of 1933. This allows retail and investment banks to exist under one roof, a big no-no since it allows them to lend to themselves. The Bush Administration follows suit by putting Wall Street loyalists in key positions in government; the result was Fannie/Freddie became a piggy bank while rendering the SEC virtually toothless.

OBAMA:

IN 2005, CEO of Fannie Mae calls Dems. the “Conscience” of Fannie AND gave them all big cash bonuses.

http://www.youtube.com/watch?v=usvG-s_Ssb0

- 2 of Obama's economics advisors, Franklin Raines and Jim Johnson (who resigned back in June due to some of this scandal being brought to light), were former CEOs of Fannie Mae. Raines was fired from Fannie Mae. He overstated earnings by 50%.

- Fannie & Freddie were major donors to ACORN, a group Obama worked for. ACORN is currently engaged in voter fraud in Michigan and Ohio.

http://zatavu.blogspot.com/2008/09/obama-fannie-ma...

2005 Senate bill 190, The Federal Housing Enterprise Regulatory Reform Act Sponsored by Sen. Hagel, R-Nebraska; Co-sponsored by Sen. Dole & Sununu

2006 McCain Co-sponsors Senate bill 190, the Federal Housing Enterprise Regulatory Reform Act of 2005 : “I join as a cosponsor of, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”

http://www.govtrack.us/congress/record.xpd?id=109-...

- S.190

A bill to address the regulation of secondary mortgage market enterprises…

Sponsor: Sen Hagel, Chuck [NE] (introduced 1/26/2005)

COSPONSORS(3), ALPHABETICAL

Sen Dole, Elizabeth [NC]; Sen McCain, John [AZ]

Sen Sununu, John E. [NH]

Status: Committee on Banking, Housing, and Urban Affairs.

http://thomas.loc.gov/cgi-bin/query/z?c109:S.190:

http://thomas.loc.gov/cgi-bin/query/C?c109:./temp/~c1091pfIob

“by regulation, establish risk-based capital requirements for each of the regulated entities to ensure that the regulated entities operate in a safe and sound manner, with sufficient capital and reserves to support the risks that arise in the operations and management of each regulated entity.”

- SEC. 111. LIMIT ON GOLDEN PARACHUTES.

(1) GOLDEN PARACHUTES AND INDEMNIFICATION PAYMENTS- The Agency may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment.


crashcromwell profile image

crashcromwell 8 years ago from Florida Author

I decided to approve the comment above, despite the fact that I've seen the same posting in other forums (and hubpages accurately labeled it as spam) because I still firmly believe all view points have a right to be expressed. The interesting thing is that the focus of this hub is on the legislation that the Republican administration has proposed (and which legislative leaders on both sides of the aisle are lining up to oppose). Giving a history lesson may be instructive about all the things that did not happen in a timely fashion when the Republicans controlled the White House and both houses of Congress, and that's all very interesting. But the fact remains that the bill that has been presented to Congress is a bad bill and Congressional leaders from both parties are wise to slow things down. The last time Congress gave the Bush Administration a blank check we wound up in the war in Iraq.

I also find it highly unlikely that Nevada Voter is truly an undecided independent voter. This kind of rhetoric is straight out of the McCain playbook.


SirDent 8 years ago

I agree with pgrundy on this. I hope the Hubpages servers don't melt don't because of that. :P

I just came across a site where you can send a petition to your legislators letting them know that you do not appreciate what they're trying to do. http://www.votenobailout.org/ Not sure how much it will help or even if it will help, but it takes only a couple minutes to do.


crashcromwell profile image

crashcromwell 8 years ago from Florida Author

I would concur with your last sentiment. I would say that it can't hurt, but I prefer to contact my legislators directly, as they tend to be more responsive that way.

And so far I don't think the servers are having any problems, so I think we're safe! Thanks for the comment SirDent!

Jim Henry


allshookup profile image

allshookup 8 years ago from The South, United States

I'm afraid that a bailout will cause inflation to soar.


pgrundy 8 years ago

"Wall Street with help of the Clinton Administration pushes for and gets repeal of Glass-Steagall Act of 1933."

LOL! Yes Bill Clinton signed the off on the bill repealing the Glass-Steagall Act. What Nevada Voter conveniently leaves out is the fact that Phil Gramm and his buddy John McCain SPONSORED the legislation. Phil Gramm is widely expected to be named Secretary of the Treasury should McCain be elected. He's the guy who said we are in a "mental recession" and that America is a nation of "whiners." Gramm and McCain are close friends and have been banking deregulation for 25 years. They have basically gotten their way, and now, with the economy totally FUBAR as a result of their beloved Reaganomics theories of unfettered capitalism, suddenly McCain calls himself a deregulator and a a reformer in order to win this election. Right. As if. And what makes it especially disgusting is that Bush used this same tactic to wrest the nomination from McCain, calling himself "the reformer with results." George Bush, a reformer with results. Well, here are the results.


PeterJ profile image

PeterJ 8 years ago from United Kingdom

excellent article! it seems a lot of americans are waking up to the fact that their country is controlled for the benefit of big business and not them, I just wish the UK would do the same


Paraglider profile image

Paraglider 8 years ago from Kyle, Scotland

Jim - Thanks for posting the legislation. I was amazed too at the speed at which it appeared, and at the way they tried to push through its acceptance as a matter of urgency as if it were a simple matter of a few thousand dollars to repair a broken power line.

Now, having seen the 'legislation' in all its glory, it merely confirms what I believed - that the present executive holds the electorate in contempt.


crashcromwell profile image

crashcromwell 8 years ago from Florida Author

Thank you Peter and Para, I would agree with both of your sentiments. The truly outrageous thing here is that the Bush Administration had this legislation in draft form for several months. So these guys knew there was a crisis brewing, but they sat on it. How many people lost their homes in the meantime, we have no idea. Instead, the administration waited until they had no choice but to act. Anyone have a guess why they sat on it so long? I'm sure it was because they knew that the electorate would hold their candidate accountable for the disaster, and they were hoping and praying that the inevitable would occur post November 4.


SirDent 8 years ago

I wonder if the government will come bail me out. Take care of all my debts.


Big Bob 8 years ago

Kick all there asses out and go for communism because thats what it is anyways.


SusanBonfiglio profile image

SusanBonfiglio 8 years ago from Woodmere, NY

I agree with SirDent. I want the same bailout of my credit card debt.

Thanks so much for posting the bill for all of us to read.

Great hub.

Thanks.


sbx24 8 years ago

Why are we Bailing out homeowners that tried to flip houses and people who can't afford the house they have. This is the biggest crock of shi_, I have ever seen.

My x-wife embezzled from me, falsified documents and had our home sold at auction, WHERE THE HELL WAS HELP FOR ME, WHERE THE HELL WAS HELP FOR ANYONE WHO HAS EVER HAD FINANCIAL DIFFICULTIES!!!

A HUGE BUNCH OF BULLSHI_T!


crashcromwell profile image

crashcromwell 8 years ago from Florida Author

I think sentiments like the one above is the main reason why this bill went down to defeat today.

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