Now we all know that is so full of bovine biosolids that it belongs on a Monfort feedlot. But the idiots in DC, in their perpetual "inside the Beltway" (them) vs. "outside the Beltway" (us) war--thanks to Wendy McElroy for the apt term--still seem to think they need to bail out their Wall Street Big Business friends and to Hell with real America.
That being said, I've been looking over the bill and have some following thoughts. The bill has 3 sections, so I'm going to break it down along those lines (or else this will run on forever!).
The full bill can be referenced here.
So without further ado, some thoughts on Section 100:
1. "Unjust Enrichment" (Page 9, Section 101-e):
"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,"Now, what is an "unjust enrichment" of a financial institution? Conversely, what is "just enrichment"? Why is the word "unjust" in there at all? It should be removed to prevent ANY enrichment--no profiteering for financial institutions under the bailout, PERIOD!
2. "Considerations" (pages 12-14, Section 103):
The Secretary of the Treasury is *supposed* to take some things into consideration:
(1) protecting the interests of taxpayers by maximizing overall returns and minimizing the impact on the national debt;
(2) providing stability and preventing disruption to financial markets in order to limit the impact on the economy and protect American jobs, savings, and retirement security;
(3) the need to help families keep their homes and to stabilize communities;
(4) in determining whether to engage in a direct purchase from an individual financial institution, the long-term viability of the financial institution in determining whether the purchase represents the most efficient use of funds under this Act;
(5) ensuring that all financial institutions are eligible to participate in the program, without discrimination based on size, geography, form of organization, or the size, type, and number of assets eligible for purchase under this Act;
(6) providing financial assistance to financial institutions, including those serving low- and moderate-income populations and other underserved communities, and that have assets less than $1,000,000,000, that were well or adequately capitalized as of June 30, 2008, and that as a result of the devaluation of the preferred government-sponsored enterprises stock will drop one or more capital levels, in a manner sufficient to restore the financial institutions to at least an adequately capitalized level;
(7) the need to ensure stability for
public instrumentalities, such as counties and cities, that may have suffered significant increased costs or losses in the current market turmoil; United States
(8) protecting the retirement security of Americans by purchasing troubled assets held by or on behalf of an eligible retirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the Internal Revenue Code of 1986, except that such authority shall not extend to any compensation arrangements subject to section 409A of such Code; and
(9) the utility of purchasing other real estate owned and instruments backed by mortgages on multifamily properties.
Now, of that list, taxpayers would expect numbers 3, 8, and 9 to be top priority, because they are direct impacts to us. We *want* stable communities and to keep homes, especially those who are being screwed by this mess through no fault of our own (disclaimer: including me!). We want to make sure that the people who busted their tails for these lenders, the people who did the yeoman work just to make a living processing honest loans, we want to make sure that those people do not lose their retirements from these failures. And we certainly want to make sure multifamily properties like duplexes and apartments and condos don't go under, either.
BUT, those things will be considered by Secretary Paulson, for about a second, before the former CEO of Goldman Sachs rejects them in favor of number 2 first and foremost. I say that because that has been the pattern of his activity all along. Expect considerations numbered 1, 4, 5, 6, and 7 to go the way of 3, 8, and 9--considered and ignored.
The Boston Globe had a somewhat reasonable idea in that the government buy a 50% stake in these mortgages directly and refinance them with the homeowners to keep them in their homes, under longer fixed-rate terms, so that they can afford the payments. Once the mortgage is paid off the borrower works on paying back the government. If the home sells, the proceeds are split 50-50.
OK, so that's not the most libertarian idea in the world. But it's a far sight better than bailing out lenders that don't deserve it. I'd rather see those of us that did it right and are getting screwed through not fault of our own get some real relief besides and industrial-size tub of Vaseline and an extra $2300 per person tax bill.
3. The "Oversight" (pages 14-17, Section 104-b):
The "Financial Stability Oversight Board" will be the Secretary of the Treasury, Chair of the Fed, Director of Federal Home Finance Agency, HUD Secretary, and SEC Chair.
Some oversight, huh? No citizenry, nobody from real America--just political appointees and Wall Street types. Their "oversight" will be limited to who signs their paychecks--the White House and Wall Street--and not to the taxpayers. BTW, this group *is* the Plunge Protection Team, too! This is the robbers guarding the bank!
4. FDIC as a loan manager? (pages 23-24, Section 107-c):
This section puts the FDIC, the agency responsible for insuring regular bank accounts, into the loan management business. WHY???
5. The spending: (pages 40-49, Section 115):
- $250B AT ANY GIVEN TIME--no limit on number of times, either. Can be increased to $350B if the President whines to Congress.
- BUT--and here's the poison pill kicker!--in subsection a-3, if the President whines, Congress is on the clock for 15 days to pass a joint resolution disapproving of the spending, then if Congress doesn't get it done, the spending jumps to $700B at any given time, still with no limit on number of times.
THAT IS UNCONSTITUTIONAL! Congress cannot delegate the power of the purse to the White House! This basically tells Congress that if Bush complains, he gets another $100B of taxpayer money automatically and if they don't act on his complaints to say no he gets another $350B of taxpayer money. It gives the White House a $100B Whiners Check and another $350B Fine if Congress decides to not. It turns appropriating funds on its head, assuming a "yes" unless Congress says "no", which violates the Separation of Powers doctrine, instead of the other way around as is traditionally done.
BTW, there is a typo in Section 115-c-2-D, in that it refers to Section 114-a-1 and 2, when it should be Section 115-a-1 and 2--there are no paragraphs 1 and 2 under 114-a, but there are under 115-a.
How much Vaseline do we taxpayers get for that rape up the rear???
6. National Debt increase (page 68, Section 122):
Increases it from the current $10.615T (as of 7-30-08 per Public Law 110-289) to $11.315T.
More deficit spending outside the budget. If they had any smarts of guts, they'd cut current spending levels to pay for it. Instead this $700B adds $2333.33 per person in debt to the nation.
Note also that if even if the debt ceiling is not increased again, a spending cut elsewhere in the budget can create more funds to blow on this scheme without increasing the debt.
There are other pieces of Section 100 that most likely could come under scrutiny from people more versed in those areas than I am. But Section 100 covers 90 of the 110 pages as well.
Next Post: Section 200, which has to do with budget-related provisions.
UPDATE: 9/29/08: With the bill failing in the House, for now, there will be no Part II or III. However, should it pass on reconsideration, I will do Parts II and III.