Cutting Apart The TARP Bailout, Finding The Lies and Poison

Sunday, September 28, 2008

Ali, CNN's Money Man Is Mouth Piece For Wall Street Bailout Legilation Part One

To listen to Ali, we in the Middle Class should be jumping for joy...I find it offensive that he is trying to SELL the agreement/bill that Wall Street Lobbyist have played such a crucial role in writing. I have started to break down the proposed legislation, and am posting what I have so far that concerns me.

The Bill as written cannot and will not meet its very purpose. It’s a false mandate that spends $770 Billion dollars of our money, while creating a whole new agency with all of its inherent financial costs with, of all people, Mr. Paulson have the powers of a GOD! It’s George W. Bush and Mr. Paulson’s original 3.5 page bill with a whole bunch of fluff added to it that provides America’s Middle Class ZERO PROTECTIONS.

The purposes of this Act are—

(1) To immediately provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States; and

(2) To ensure that such authority and such facilities are used in a manner that—

(A) Protects home values, college funds, retirement accounts, and life savings;

(B) preserves homeownership and promotes jobs and economic growth;

(C) Maximizes overall returns to the taxpayers of the United States; and

(D) Provides public accountability for the exercise of such authority.

If you read the bill completely, or browse through the section provided here, you will see it does none of the above. There is no mechanism to protect our home values, and in fact said values will continue to drop, with no mechanism in place to make us whole, to bailout our own failing assets. The bill fails to promote home ownership, as there is no mechanism in place to address the egregious reality that our first homes are not adequately protected in Bankruptcy Courts, and that judges are powerless to step in and take appropriate steps from the bench to protect our homes, to keep us in them. Further, this bill will not promote job growth, and in fact economists on both sides of this bill have said the bailout will not stop the continued erosion of jobs, nor slow the flow of the recession we as a nation are in.

AUTHORITY.—The Secretary is authorized to establish a troubled asset relief program (or ‘‘TARP’’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.

Read this paragraph…the bill is giving one Mr. Paulson, formerly of Goldman Sak’s and his cronies the ability and legal right to establish A) a new program/agency, B) make the rules by which it will abide by, C) establish the criteria that decides what assets will and will not be bought out, as well as the price to be paid for those assets, and D) gives him the right to make all these rules in a very DICTATORIAL fashion. There is no real oversight, no checks and balances, no one but a dishonest Wall Street insider guarding the hen house. It gets even worse when you realize the bill also gives Mr. Paulson sole rights and discretion to decide who will work inside this newly created labyrinth. This is reminiscent of the fatally flawed legislation that created the NRC, while failing to give Congress any meaningful oversight of the agency.

The Secretary shall implement any program under paragraph (1) through an Office of Financial Stability, established for such purpose within the Office of Domestic Finance of the Department of the Treasury, which office shall be headed by an Assistant Secretary of the Treasury, appointed by the President, by and with the advice and consent of the Senate.

When you read that the office shall be run by A POLITICAL APPOINTEE, you are being told this new office will be around for ever, and that it will be a highly political position, a plumb AWARDED to those deserving souls that wrote out the right kinds of checks, or did the right kind of favors during a Presidential Election year. This reality is born out in the next section when you read:

Section 5315 of title 5, United States Code, is amended in the item relating to Assistant Secretaries of the Treasury, by striking ‘‘(9)’’ and inserting ‘‘(10)’’.

So, this Emergency Legislation, this BAILOUT OF WALL STREET for Wall Street FAT CATS is creating a permanent new program, and increasing permanently the number of POLITICAL APPOINTEES nominated by the President from 9 to 10. These are PLUMB JOBS with many perks, including a very nice six figure income, a spacious office, and a lavish government expense account. Worse, such a position and the person who holds it is going to be the target of a lot of Special Interest lobbying on a never ending basis.

If you read the next section, we need to tell our elected officials to exercise GREAT CAUTION…the Secretary is only required TO CONSULT with others, but there is nothing in the entire law that LIMITS HIS POWERS, or instructs him/her to abide by or accept any of the counsel they would be getting in consulting with others.

The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation, the following:

(1) The Secretary shall have direct hiring authority with respect to the appointment of employees to administer this Act.

(2) Entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code.

(3) Designating financial institutions as financial agents of the Federal Government, and such institutions shall perform all such reasonable related to this Act as financial agents of the FederalGovernment as may be required.

(4) In order to provide the Secretary with the flexibility to manage troubled assets in a manner designed to minimize cost to the taxpayers, establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase troubled assets and issue obligations.

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

Ask yourselves if you trust ANY ONE MAN (or woman) with this much uncontrolled, unchecked power. There are no safeguards built in here, this is FAR MORE THAN A BLANK CHECK.

PREVENTING UNJUST ENRICHMENT.—In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing the resale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset.

There is a very KEY REASON this section is worded this way, it is a LOOPHOLE they do not want us the taxpayer to catch…we are supposed to feel all warm and fuzzy good that the Secretary will be prevently UNJUST ENRICHMENT by being careful not to buy assets from these companies for more than the companies PAID FOR THEM! Hello, without exception, most of these assets are worth FAR LESS than what was paid for them! How about changing the above to read that a fair market price will be ascertained for the assets, not to exceed the price the seller paid to purchase the asset, but which may be less? Remember how we as citizen taxpayers were supposed to be protected trough OWNERSHIP…don’t hold your breath.

If the Secretary establishes the program authorized under section 101, then the Secretary shall establish a program to guarantee troubled assets, including mortgage-backed securities issued prior to March 18, 2008.

(2) GUARANTEES.—In establishing any program under this subsection, the Secretary may develop guarantees of troubled assets and the associated premiums for such guarantees. Such guarantees and premiums shall be determined by category or class of the securities to be guaranteed.

(3) EXTENT OF GUARANTEE.—upon request of a financial institution, the Secretary may guarantee the timely payment of principal of, and interest on, troubled assets in amounts not to exceed 100 percent of such payments. Such guarantee may be on such terms and conditions as are determined by the Secretary, provided that such terms and conditions are consistent with the purposes of this Act.

Someone tell me I am wrong here…I am reading here that a situation/program would be created wherein the company gets to KEEP AND ASSET, and have the treasury paying the interest and principle on the load that secures that asset?

If this is true, this is INSANITY.

Stopping here on the draft and posting it to my blog as I have just learned that a NEW FINAL agreement has just been released by the Congress…BE AFRAID PEOPLE, be very, very afraid.