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.
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.