Please calm down folks. The bailout is not a "power grab".

If you're reading this, Larissa, you know I usually love your writing and analysis and consider you a hero.

But I think you and Adam Davidson have fundamentally misread this bill. That's not to say that the bill doesn't have flaws (I'll get to that), but it is not the unprecedented power grab you have described it to be -- or at least I don't yet think it was intended to be.

First, I think we have to understand the "non-reviewable" clause. We have to keep in mind that the federal government has been pushed into the position of nationalizing big chunks of the finance industry -- Fannie, Freddie and AIG. Conservative and liberal commentators alike are calling these moves, "nationalizations."

It seems to me that the Treasury is worried that their purchase of mortgage backed securities (mbs) from surviving financial institutions, in the context of widespread nationalizations, looks a lot like forced sales -- almost like the exercise of eminent domain.

Moreover, we've seen reports that the Treasury plans to drive very hard bargains with the financial institutions, and will not pay the face value of the mbs they purchase. That's why some commentators think that in the long run, they might actually make money from the bailout.

In eminent domain and in the course of certain other transactions between private actors and the federal government, the private actor can seek a higher price by suing in court to get a "fair" (ie higher) price.

But we know that this buy out of mbs has to happen fast if it's going to have any positive effect. The Treasury's decision to purchase a series of mbs with a face value of (hypothetically) $10 million for $8 million cannot be tied up in court with (hypothetically) Citibank bringing an army of corporate lawyers to federal court to get the price jacked up to $9 million. (You can read a bit of my explanation about the pricing, and scale of the bailout, and why the Treasury will seek discounts, along with helpful comments by DUer, alcibiades_mystery, here, from posts 8 down.)

All this provision is saying is that in this particular context -- the purchase of mbs -- courts and administrative agencies will not be able to review the price or terms that the Treasury sets for the purchase. It's saying to Citibank, Goldman, or whoever, "take it or leave it."

I don't see why any progressive who wants this bailout to be as cheap as possible would want the financial industry to have the right to go to court to tie up the process of buying out their mbs to extort a higher price.

I think that as a bill drafting matter, Congress should insert some language like this:

Decisions by the Secretary pursuant to the authority of this Act <insert: with respect to the purchase, pricing or management of mortgage backed securities> are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

It's really a simple drafting error, not a coup de etat.

As for the ability of the Treasury Department to write its own regulations, that's pretty standard in the administrative system. Usually, the public has the right to comment on agency regulations that are proposed by a federal agency, and they appear to be dispensing with this given the time constraints. Also, Congress has the power to change or abolish administrative regulations (because regulation writing power is delegated from Congress to the agencies), and nowhere in this short bill does it say that Congress would not have the power to do so here.

My biggest gripe with the bill is that it clearly intends for Treasury to farm a lot of this work out to financial firms. Paulson already turned to Morgan Stanley to advise it on the AIG takeover.

These firms charge exhorbitant fees (thousands per hour!), and the "advisors" will be part of the old boys network that got us into this mess in the first place. I sincerely doubt that Morgan Stanley is going to drive a hard bargain with Goldman or Citibank. On the other hand, Treasury may have in mind the catastrophic S&L bailout, in which the Resolution Trust Corporation virtually gave away real estate all over the country until they turned the disposal of assets over to private players who were given incentives (through profit sharing) to drive harder bargains.

Either way, it would be a giveaway to the private sector that shouldn't be happening with up to a trillion dollars of taxpayer money.

It would be much better for them to do what FDR did when he created the SEC -- hire a bunch of bright young accountants and lawyers right out of university and recruit them into some appropriate parts of federal bureaucracy.

So please folks, let's all calm down. It's not a coup; it's a drafting error.

ON EDIT: I just read Krugman's editorial, concluding "No Deal". I think he nailed it, in that there is another big error in the bill -- namely it doesn't specify what valuation method for the mbs to be purchased the Treasury will use. Only if Congress specifies that Treasury will purchase at a discount and how that discount will be calculated (I would say based on how many mortgages are non-performing) should the Treasury be given non-reviewable power.

To get a back of the envelope sense of what that valuation, which must be in the bill, should look like, go here, from post 8 down.

I won't say any more, but I appreciate your post...a lot

:hi:

haven't seen you in a while :pals:

DU was too much to handle for me..lol

What part of this Tsunami of impending debt does one not understand?

Can we really trust that 700B is the limit.

If one believes that I have some great land for one to consider.

See www.wallstreetdigest.com/hotline.php for numbers.

Maybe you can believe that this is an "honest mistake", but after 8 years of Bush I'm not sure how you can.

I truly understand and accept that the Bush administration has looted this country and the treasury for the last 7 years.

But frankly, the way things are moving, I think they are out of the loop.

Ever seen the movie Serpico -- one of my favorites? It's about a crusading NYC cop, Frank Serpico. He basically won't take bribes in the Bronx and works to expose corruption in Manhattan.

Then as revenge, the department assigns him to Brooklyn narcotics. On first day, a fellow narcotics officer pulls him into the car and says:

"All right, you cocksucker. You might get by with that shit in the Bronx, but down here, eight thousand a month is chicken feed. And with that, you don't fuck around. You understand? Good. Now get the fuck out."

I hate to compare Bush to Serpico, but it seems to me that at some point the financial powers said to Bush, "you might get by with stealing an election, letting New Orleans drown so you could ethnically cleanse it of Blacks and Democrats, looting the public treasury or committing war crimes Iraq, but down here, a trillion dollars is chicken feed. And with that you don't fuck around. You understand? Good. Now get the fuck out."

Bush and his looters are not in control of this one.

Again, their history would show otherwise. You seem to have little to back up your assertions but your own intuition. Frankly, I'm not willing to gamble my children's future on that.

he has been a figurehead all along. The Katrina non-performance was because they did not give a shit about it and left him to screw it up on his own. They had their war, after all. And they were moving along quite nicely with their financial takeover.

even if the looters are not Bushco.

Bushco has been a mechanism for the PTB, not the ultimate perpetrators of this whole mess.

Btw, you forgot the role of Buhsco/PTB in 9/11-- a pretty important and critical crime.

A few days at this point ain't gonna make a difference. How long has it been already? We need to get mad, stay mad and NOT have some Admin legislation shoved down our collective citizen throats. Take two weeks and do it right this time so this shit doesn't happen again.

The Investor Class is terrified that the financial system will collapse, they aren't going to let a bunch of neo-con ideologues to f*** things up even more.

I would love to hear a financial CEO start a conversation with Bush that starts with "All right, you cocksucker ..." and ends with "You understand? Good. Now get the fuck out."


:rofl:

:rofl:

So to speak. You are one of my favorite posters, and I am SO glad you provided the link to this post in another thread -- http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4047081 -- it feels good to exhale. :smoke:

(I'm not a smoker, but I may have to take it up before 2009.)

my, my, you sound like "cocksucker" is an insult.

well, you can kiss THIS cocksucker's ass....

bigot.

:grr:

We - many of us - faced the same dilemma with all the handwringing about yellowcake and tubes.

Sure, their hyperbole was suspect. Sure, it was obvious they welcomed the "crisis." But was there any fire behind all the smoke they were blowing? That is where we are now. There is enough of a smokescreen, enough of a doomsday scenario, that it is impossible as a member of the general public with only heavily-filtered information to be sure one way or the other if there is any necessity for the draconian reaction.

Back then some said "I know it is all bs" and some didn't. The former now claim some sort of mystical prescience. Others of us said "I fear it may all be bs." We can take some solace, I suppose, in at least knowing we smelled a rat. But now we smell a rat again, and are faced with the same dilemma. It can be argued either way - tinfoil hat or this OP - and in neither case are there absolute facts to prove the case.

Unlike all of those other times you mentioned.

The story of cheech and chong telling the congress committee, late at night "we are days from meltdown" just sounds like a bluff that should be called. It so smacks of "the first warning will be a mushroom cloud" that it is hard to believe that this time there really is a wolf.

But I'm a lousy poker player. I call "bluffs" when they aren't, and fold when they are. So I, personally, defer to the "wisdom" of those with more knowledge of the real facts - if such people exist and are in position to do anything, which I doubt.

Damn, where is John Kennedy when you need him? Now THERE was a poker player.

Yes, but Bush gang lies to us constantly. But the financial industry does not exclusively lie to each other, and what they are talking about to each other was more dire than you can imagine.

Last week I tried to explain that we were days away from such a total system collapse that you would not be able to cash a paycheck or use an ATM:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=4027506

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=4027506#4027921

the "financial industry" to which you refer was/is not complicit in a grander strategy. I am NOT saying that is so; just saying that all we have is tea leaves...

You can't make the leap from "we were days from a total system collapse" to "the language in the bill is a drafting error." The two aren't connected at all. It almost seems like you're saying "We really need this bailout, so I'm going to believe whatever I have to believe in order to make sure it gets passed."

I was asked, how do we know the crisis is real. My answer was that the finance people themselve, talking to themselves are saying it is, and the magnitude is so great that we were days away from not being able to cash checks or use atms.

The drafting of the bill is a separate issue.

I'd like to know your opinion about having cash in a bank.

Do you think it's unreasonable to withdraw a good chunk of cash, to have
some cash on hand?

I'm interested in what you are doing, or measures you have taken with your
own money/investments--if you feel comfortable sharing.

I used to draft mortgage backed security documents and I know their place in the system. They are basically the "money" the entire system runs on.

I am not doing anything special because -- and if there is one idea I could get across to everyone it's this -- if the system goes into the collapse that we were days away from, there's not shit you could do to save yourself anyway.

Those of us who grew up during the Cold War know the feeling well. We were told to "duck and cover" - to get under the freaking school desks - if global thermonuclear war commenced. We laughed and joked about that. We lived through the Cuban Missile Crisis knowing that if either side "pushed the button" we were toast. I remember wondering if we'd see the incoming missiles, or if we'd just suddenly be enveloped in a firestorm.

We got up, ate breakfast, went to school, went home, walked the dog...

Doomsday scenarios really don't mean shit. If it happens, it happens. A comet could strike the earth and bring mass extinctions. With any luck at all, the human race would be among those made extinct, the planet will spend a few hundred million years recovering, and a more intelligent species will evolve. Meanwhile, I have to fix the sump pump.

...and frankly--your post is one of the first that's given me peace about this situation.

I have been pouring over articles--trying to find the answers about this bailout.

As you astutely pointed out--the American public really has no answers. There are too many
unknowns--just like with the Iraq war--and nearly every other Bush Administration scandal and
fuck up.

The sad part is--Bush skates on everything. No scandal touches him, and the neocons just
keep rolling along with their grand plan.

I'm at the point now, where I think that getting mired down in figuring this stuff out is a
waste of time. While we're engaging in intelligent discourse, the country is going down in
flames. I bet they've logged onto liberal blogs and messageboards, to periodically guffaw
at those of us who thought that we could do something about election fraud, or the way they
treated Katrina survivors or the Iraq war, or torture or illegal wiretapping, or the Valerie
Plame outing or their future plans to go after Iran next.

I'm also at the point where I'm done wringing my hands. As with your example of the Iraq war--we
can kick, scream, blog and write our Congress members, all we want. By the time our opinions have
been validated--the neocons have moved on to their next crime. It doesn't matter.

The writing is on the wall. The only thing you can do is contemplate a complete meltdown of everything
that is America--and be prepared for it.

In a government of "We The People" we are all, every one of us, urged to "get involved," to be an "educated voter," because we have the responsibility to make the right decisions.

In a dictatorship, or oligarchy, where we as individuals are powerless, we are relieved of that obligation. We can just bumble along, doing whatever we can to feed the kids, and say "oh, that is out of my control." That is exactly what they want, of course. We are supposed to be serfs in a medieval society. The wealthy landowners will make decisions (that make them wealthier) and we will just breed, work for them, and die.

I kind of want my Jeffersonian government back, with all its awesome responsibility, including that of sharing responsibility with idiots. The dissolution of the free press was a key component of this coup. As an individual, I couldn't do anything about that, either. I did start the Algae Awards, and have had fun with it. But Ashleigh Banfield remains banished. Read the last two paragraphs of this, if you don't want to read the whole thing:

http://www.algaeawards.com/Broadcast_Media/ashleighbanfield.html

I still think it's good that we face reality finally. If we don't know what we're fighting against, we'll only fight one another. People are starting to use the dreaded F word. I no longer see snarky posts "Ok is it fascism yet?" with arguments that follow. Most people seem to (even if you argue for awhile about it) concede that "Okay, so it's fascism. Now what do we do?" It seems more like Spanish fascism than Italian or German fascism. Military capitalist nationalism with a secret composite face. I'm not terribly certain how entirely nationalist it is either.

We face a new paradigm.

something happened in fact last week on wall street - unlike the Iraq BS, there really was a disaster. Like 9-11, we are being asked to sign on to the purported remedy without any due diligence, a remedy that appears within days out of whole cloth, and when we ask why this particular remedy we are told 'because' as if we are two year olds. I call bullshit on the remedy, not on the disaster. The WTC did fall down, we were attacked, and the financial system collapsed last week. Those are facts I accept. The remedy, in either case, not at all.

it is better.

But as to what to believe of what we are told - same skepticism in all three cases. Yes, there WERE attacks on 9/11 and there IS a financial crisis, and pretty much everything about Iraq was phoney. But as to believing any interpretations or dire warnings... great big chunk of rock salt

from Hank Paulson's legislative office. If Congress passes ANYTHING even remotely like it, they simply don't deserve to hold office.

Period.

This isn't that unusual. When federal agencies want to do something that requires statutory authority, the write a draft of the bill and ask a congress person to sponsor it.

for the CEOs, no investigations of fraud....


FIRE! FIRE! NO TIME TO THINK. GIVE US $700 Billion with NO STRINGS RIGHT NOW!!!

That may be because of political calculation. Or, and I hope this is true, he realizes that the bailout cannot work unless the families paying mortgages are kept in their homes and out of foreclosure.

There has to be assistance at the bottom end of the mbs system or else the bailout at the top won't work.

But to prevent the complete meltdown, which is days if not hours away, they have to get this liquidity provision working fast -- before they can craft a homeowner bill.

and the goals and threats are EXACTLY the same:

Blank Check or you get the blame.

This has been at least 4 years in the making. To say the amounts are unprecedented is an understatement. Let's take a few weeks and craft legislation that fixes the problems.

NO BLANK CHECKS.

I haven't heard which countries yet. China and Saudi I would guess.

and I appreciate your thoughts Hamden. I'm not sold on your comments completely, but they do elaborate on some of these concepts which I didn't consider before.

Appraisal must precede panic, I truly believe this.

That said, I do worry that some of your opinions presuppose certain favorable conditions (drafting errors, lack of homeowners assistance in Paulson's present bill) which we have no way of verifying at this point...and given the day and circumstances, is it reallly wise to bank on this with such a blind, optimistic eye?

And Congress hopefully will do so. It needs to be tied to assurances that there will be homeowner assistance, for example.

I just don't think we need to go off the rails thinking that Paulson is giving himself the power to set aside the Constitution, etc.

Also, about the drafting error -- even as the bill now reads, it's clear that the "no review" applies to things Treasury does "pursuant to the authority of this Act" -- and "this Act" does little more than give the Treasury the "authority" to buy assets, so it is hard for me to interpret this any other way. I'm just saying it needs to be clarified so that the Treasury can't try to stretch it and so the public doesn't go into panic mode -- as we have.

I think we should do THAT part of it FIRST.

when it comes time for the assistance at the bottom the republicans will block it. It is an election year and it goes against everything they stand for.

...I'm not going to assume that what seems like a power grab is really just bad phrasing.

We've seen the no-bid contracts for the Iraq War. We've seen a rape victim employed by Halliburton unable to sue.

Congress should oppose this bill, and we should write our Senators and Reps to oppose it.

we all know ... Money equals power.

When they grab money they are grabbing power.

They bid to sell, and then sue about the price they offered? I think a little more paranoia (like Larissa's) is in order! (Ok, a lot.)

The other two points I agree on, and some other objections not mentioned.

Btw, the RTC did very well, that's some revisionist history there. Of course it didn't go smoothly at first, inventing its way through. But we could use our previous experience and do it more like that again now, rather than this way - we took over failed banks first, which is the right way to do it. I absolutely would not pay the ridiculous fees to the same perps we're bailing out. At the least keeping it within the visible government would create some honest jobs as opposed to fattening sharks.

was that those were FSLIC institutions, so the feds had the obligation to take over the entire institution and make depositors whole. Mbs are held by a much wider array of institutions that the feds definitely do not want to take over.

All the feds want to do here, really, is make a market in mbs to relieve the liquidity crisis.

There was a very interesting comment on NPR the other day (don't have the cite), but a commentator said the bailout is an attempt to separate the liquidity crisis from the solvency crisis, solving the former and letting the latter work itself out. In other words, the bailout will let lots of financials die an appropriate death without taking down the system.

RTC involved selling real estate taken out of the banks; this involves getting and selling securities. You are correct that RTC improved its performance, but overall, there was a net cost in the hundreds of billions.

IIRC, in the Mexico debt bailout, the feds eventually made money. Because this involves debt securities, there is the possiblity that with the right discount, the feds could make money or at least drastically reduce the cost of the bailout in the long run.

My paranoia isn't entirely going away, but this helps. :D

not sure I don't agree with you. I have yet to be able to completely wrap my brain around everything and come down on one side or the other. I mainly wanted to say thanks for a well-reasoned, calm life raft welcome in a frenzied sea.

screaming at me telling my I'm deluded or wrong.

.... treasury is going to play hardball with the bailees? Why not put it in writing? You entire argument is that we have to let them do it without control or oversight so they can play hardball.

Bullshit. Paulson comes from the industry he is "regulating". You really think he cares more about the taxpayers than he does his old friends?

Bullshit. Paulson is asking for a blank check. I don't believe in blank checks, blank checks are what got us in this mess. There is also a pretty solid school of thought that says this entire exercise can do absolutely nothing more than delay, and increase the cost of, the inevitable.

Power grab? Probably not. Just more Republican Assholes trying to take advantage of a fucked up situation they created. Money grab is more like it.

Hmm, interesting choice of words, "execution". Let me explain.

It's obvious that GLBA (Graham, Leach, Bliley Act of 1999) opened the Pandora's box that was closed by Glass-Stiegel. In the first case the legislation was enacted because we acted like spoiled children and had to have some controls. Things were good for a "while" until companies started to get into things that they didn't know what do to with. S&L's were more than just the local mortgage lenders and banks became bigger behemoths. People were saying that such legislation isn't necessary because "nothing has happened" and "we're more mature & knowledgeable" and it's hampering businesses. The American economy became teenagers and wanted more freedom.

The first hint was the S&L & junk bond issues of 1980/1990. S&L's in Ohio & Texas had private insurance (not FSLIC) and eventually that bail-out cost the tax payers billions and the elimination of the FSLIC. Fraud was prevalent because things were allowed to happen that we didn't understand. We should have learned our lessons. And there was Continental Bank & the Penn Square situation.

Fast forward to the era of the "great" Alan Greenspan. This guy was anti-regulation. Many times he was quoted saying that his examiners "couldn't find anything". Um, from a friend who was an examiner, they weren't allowed to kick the tires or question the big banks too much. The late governor Edward Gramlich was always telling Greenspan to check on these instruments that people don't understand but only see a bottom line. Greenspan's answer? "Let the market decide". Remember his comments in front of the Senate Banking Committee that these interest-only mortgages were good, as well as the tax-cuts, and even that debt & deficits don't matter? Yep, I blame him as much as anyone else, especially since he KNEW the power his words had, not only in the US but around the world.

Oh, but there's more blame to go around. Don't forget that there are FDIC, OCC (treasury), and State Banking examiners (in addition to Credit Union and other examiners). Each has their own agendas and most were hampered by the lack of regulation. And the more pro-restraint & pro-consumer legislation that was introduced, the more they were shot down and pro-business legislation were put in.

So where do we go from here? TO A POINT, I feel sorry for Bernanke since as a Governor he was pro regulation and inherited this mess and he's pushing his Fed Examiners to review everything. I feel it's uglier than most people realize.

I don't know what the complete answer is but I know part of it is "too big to regulate". There aren't enough people to keep track of everything. These banks and financial entities have to cut down to a manageable size. Anti-trust must be enacted. Otherwise, I can't imagine the resolution.

Just my rambling .02 on a Sunday morning. . .


Paula

The reality is that

1. if the bill passes as drafted, COMMERCIAL MBS/Derivatives/securities are inclusive. This is a patent bait and switch. Who is talking about Commercial??? Ok, a dumb homeowner, sure. But a commercial development with lawyers and due diligence/acquisitions guys? Come on, they know better and they knew exactly what they were doing.

2. the bill proposes a 700B carry at any given TIME. Little scenario. Take 700B of shit on the books at 100% value. Sell the best performing stuff, say half at an 80% discount to a banker (20 cents on the dollar), then write down the remaining 350 billion by 80%. Now you have 350 billion on the books that no one wants, but you have valued it at 70 B, so we go out and meet requirements and buy another 630B. See what happens, this ain't that hard to figure out, they are piling shit on shit. It is WRONG, and if I figured this out in 10 seconds, other REALLY smart guys will too. Not only that but you are proposing we citizens have limited oversight and just not ask questions??? Not me.

3. This bill does NOTHING to solve the problem. ZERO. It just creates a wasteful clearinghouse for additional government giveaways. If you are in the business, i believe that your scared witless, because you realize your business is gone as sure as probably your standard of living and all the time you spent in the mortgage business creating a career. I can relate.

4. I read the Shock Doctrine, and thought "Meh, whatever", and I still think that, so I am NOT a drinker of anyone's Kool Aid. BUT, this is how you get stuff done. Humans seek comfort, and will do or say anything to maintain the status quo. We also think we are alot smarter than we are, and give alot of value to those in authority. Think about it, if you get pulled over while driving, the cop KNOWS there is a 98% chance you will do what he wants because you give him that power by the virtue of his uniform, not his gun. Secretary of the Treasury, forget it. Most Americans want and NEED him to tell them he can maintain the comfort zone.

Summary.

Classic abuse of power right out of Machiavelli, with the added twist of a massive austerity program ala Argentina. All so we don't have to get dirty as a society, and our overreaching desire to be proactive feed this. No worry, we'll be very dirty soon enough.

This is why the Indians and Chinese always win. 75% of their citizens already LIVE in poverty, makes it easy for them to make hard decisions, but impossible for us as we utter the phrase "by GAWD I'm an AMERICAN!!!"

I was in the business 10 years ago. It's just that I think I have some insight into what's going on from prior experience. So no, I don't expect my standard of living to be affected any more than any one else's.

I work in non-traditional investments. A lot of REIT's, commodities, stuff like that. We watch RL Brown and others, and as "can" rates and vacancies are way up and accelerating in commercial, I have gotten more e-mails of "Hey looks like we will be ok", along with numerous offers to start up "special concerns" to "help" the government liquidate through GSA contract. These guys though, won't need to be GSA though I guess, and they know it and are salivating. This is a bailout of brokers and financial services companies it seems to me. Actually, I wonder what the service fee/asset ratio will be. Lot of finance guys and gals need jobs, as it is the single largest sector of the economy.
Anyway, didn't want to be rude, just disagree.

Commercial mortgages thrown in for fun? Your money or your life!

But most of us (and Hamden) will still be able to open another credit card to maintain our standard of living.

That said...I am not a financial guru but I generally have good instincts. My instincts tell me there is more than one bear in the woods and following this action by the Treasury, we'll be embroiled in yet another "crisis".

For some of us, even if our portfolios make it out alive, the fees and taxes we will pay in the future will effectively negate any gains, let alone the substance.

Regardless...this is it..the end of the New Deal, the good life of the 50's. 60's, and 70's. We, the grandchildren of the so called 'Great generation' have squandered what our parents following WWII hoped to secure for us. Oh, I know we didn't plan it or do it by ourselves.

But we do have ourselves to blame too. We put these smart babies through college, pumped up the MBA's and put them to work where they became the investor drones who reached their commission quotas for the firms by selling reality right out the window.

The ownership society indeed.

i'm calm coz there is absolutely nothing to be done to prevent it.

It is being sold as a way to save our financial system, but in reality it is nothing more complicated than the most massive redistribution of wealth from the bottom since the same scam known as the S&L crisis. The underlying assets that have been devalued will be reclaimed at garage sale prices by a small(er) group of owners.

This is the final soaking of the last drops of wealth that the middle class had before the bubble cannot be artificially inflated any more.

WTF? Are you that dense? Have you learned nothing over the last eight years? These guys use a crisis to convince good people like you to accept their vile crap unchallenged. See the patriot act. They knew full well that this collapse was in the works and this legislation, written as always with the help and guiding hand of the gang of crooks getting bailed out here, was in the works long before the crisis manifested itself, complete with these odd 'drafting errors'.

Even without the language I suggest in the OP, the "no review" clause applies to actions taken under this bill. The actions to be taken under the bill are the purchase of mbs. It is self-limiting even without clarifying language.

Also, in this case, who are "These guys"? Frankly, Bush and the cabal are out of the loop on all this. MoDo was making fun of this the other day in her column, referring to "President Bernanke."

If it walks like a duck, talks like a duck, it's a fucking duck???

Sept. 21 (Bloomberg) -- The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets.

Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.

``He's asking for a huge amount of power,'' said Nouriel Roubini, an economist at New York University. ``He's saying, `Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy.''

As congressional aides and officials scrutinized the proposal, the Treasury late yesterday clarified the types of assets it would purchase. Paulson would have authority to buy home loans, mortgage-backed securities, commercial mortgage- related assets and, after consultation with the Federal Reserve chairman, ``other assets, as deemed necessary to effectively stabilize financial markets,'' the Treasury said in a statement.

The Treasury would also have discretion, after discussions with the Fed, to make non-U.S. financial institutions eligible under the program.

The plan would raise the ceiling on the national debt and spend as much as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. Paulson is asking for the power to hire asset managers and award contracts to private companies. Most provisions of the proposal expire after two years from the date of enactment.

http://news.yahoo.com/s/bloomberg/20080921/pl_bloomberg/agtppxaxtrok

We CANNOT pass this bill out of fear. We MUST take the time to review it and its implications.

"ASSET-BUYING POWER Unchecked by Courts." It does not say "set aside the constitution power unchecked by courts" or "ability to write its own regulations unchecked by courts."

What is asset buying power? The power to decide whether to buy and what price to pay. That's what they don't want tied up in the courts.

As my OP states, the bill should be revised (1) to make clear that this unreviewable power is indeed limited to asset buying and not having to haggle in court with the banks over prices, and (2) to establish in the statute the valuation method and require that Treasury seek a discount in the purchase price.

We have time to work on it. Paulson just said "there's NO market " for these bad loans... except US apparently.

Be a sucker.

was a big part of giving confidence to the markets.

On the other hand, interbank liquidity is still terrible, which is very scary.

The tin-foil-hatters are annoying.

Who is going to trust this Sec of Treasury? Not me. Cheney hasn't finished his programs on the part of his baron and foundation bosses.

I am holding out that I can trust our Dem leaders, but everything makes me see black. Some have been disastrous for this country. The proof is going to come out soon. It's all been in the works for decades with tweaking and supplements, now is their hour and we are going to be hurting more than now.

Good post.

isn't the bailout and the fact that they can continue with solid assets, payment enough? They profit no matter what....it's a win win for them...and a lose lose for tax payers.

and why he was taken down. Can anyone here more clearly re-connect the dots? If there is a relationship between his downfall and the scary chaos in the markets, one of which I'm sure there is.

http://www.brasschecktv.com/page/291.html

Why Eliot Spitzer was (politically) assassinated

The predatory lending industry had a partner in the White House

They have spent the last 8 years working their asses off to enrich the same people that you suggest will have to give a pound of flesh in return for my money.

To accept your OP, I must assume that the administration considers my money a precious resource that should be given to Citibank only grudgingly.

That's what I wrote in the last paragraphs -- that the bill needs the valuation method and the requirement that Treasury buy at discount written into the legislation.

Adrenaline, and all that stuff. I read about 6 paragraphs before my "fight or flight" instinct took over.

"Reports suggesting that the Treasury intends to drive hard bargains" is too thin a promise to hang one's hat on.

I have reached the bottom of the thread at last. This has been a really bad day for alot of us. I have spent much of the day chasing the latest bit of info until I found this thread.

Thank you for the time that you have devoted to this today. Tonight I will sleep better.

The government is not taking away these loans, it is offering to purchase them. They can offer 1% or 100%, and the offer would not be reviewable by any court. That would be like you offering your truck to your neighbor and your neighbor suing you because your offer was too low.

Yes, it is a scam. A trillion dollar scam to stampede Democrats into committing US funds to save a variety of distinctly GOP business interests, all in the next 120 days, all to hobble the new administration and further eat up the federal budget.

While Congress fights over $18 billion a year in earmarks, the worst president in modern history wants us to trust HIS appointee to spend a trillion dollars, at his discretion, in the next 120 days.

Yes, it's a major power grab, and worse.

You are lost in the minutiae. Stand back and see what is happening.

...from the beginning. The foreclosures- people MIGHT not be abe to vote. The election coming up- but now the repub Pres will bale us out, need I go further ? It's ALL a set up. Wake up everyone. This is no silver hat theory.

Federal agencies combine administrative, legislative and judicial powers. That is why they have three-part structures, an administrative part, a quasi-legislative part and a quasi-judicial part. This bill would abandon that structure and hand to the Secretary unfettered legislative and judicial power as well as administrative power.

It is interesting that you so lightly dismiss concern about the provision in the proposed bill that would prohibit judicial review of the Secretary's exercise of authority. Your analysis is persuasive only because of your clever sleight of hand. Like a magician pulling a rabbit out of a hat, you produce from thin air reassuring language that would limit the Secretary's almighty power over the property of selected institutions (selected at his discretion with no review or supervision other than that of the president). Sorry, but that language is not there. And what is more there is additional language in the proposed Act specifically granting total discretion to the Secretary in the exercise of his powers under the proposed Act.

It will take more than conjuring up imaginary magic words to convince me that the intention of the author of this proposed bill is anything other than to grant to the Secretary powers that are completely discretionary and not subject to judicial review.

As for the power of Congress, the provision that provides for reports to Congress specifies that the reports will be biannual (every six months). That language could be interpreted to mean that Congress will be barred from more frequent review. As a matter of fact, considering the past actions of the Bush administration, its refusal to allow executive employees to respond to the subpoenas issued by Congress even when Congress votes to hold the subpoenaed individual in contempt, I seriously doubt that the Secretary would be permitted to cooperate with congressional oversight other than the perfunctory reports at six month intervals. This is especially likely in view of that troubling language about the sole discretion given to the Secretary.

As I recall, the Constitution of the United States guarantees to Americans the right to due process, to property and to just compensation for the taking of property. I have not agreed to relinquish or waive those rights, and I do not believe that any other American has agreed or would agree to do so. This is particularly true of the companies who are likely to be selected by the Secretary (at his sole discretion, of course) for "bail-out" under this proposed Act. The shareholders of the companies still have the right to just compensation as do all of the rest of us when our property is taken for the common good.

The right to due process must be respected even in times of economic crisis -- even especially in times of economic crisis. I suggest that you read (and I think the Democrats in Congress also need to read) the history of the great German inflation. The Germans did not have the concept of right to just compensation. And their contract law, their Commercial Code, focused on the concept of "good faith," not the right to just compensation. When faced with massive inflation, courts simply went in and rewrote contracts (especially leases) in order to save the fortunes of the landlords (who had entered into long-term leases for specific rents with inadequate or no rent adjustment provisions and were going bankrupt as the rents due them did not even cover the cost of heating their buildings). No one should propose any solution to the current crisis without first studying the history of Germany and Austria in the 1920s and 1930s. Whether or not this bill is enacted, we face massive inflation.

There has never been a moment when Americans needed to adhere to the principals of the Constitution. This bill, unfortunately, insults our Constitution. If enacted, and even if enacted with some of the changes the Democrats propose, it will lead to a disaster even worse than the disaster we are now in. (Where is the Federalist Society now that we need them.)

We need to protect our economy from the Bush administration's propensity for panic and overdramatization. Holding a firehouse sale of American assets is not the answer. But that is precisely what this bill would encourage.

Shareholders in the mismanaged companies should have the opportunity to sue the boards of directors and managers. Those who committed criminal fraud should be brought to justice. Thus, the right to due process for all concerned should not be ignored or set aside. Due process is necessary to insure justice for all involved at all levels in this. Due process is not a luxury. It is the glue that holds our society together.

Americans need to cut back on their standard of living. We have lived far above our means for far too long.

The first luxury that we need to give up is the War in Iraq. We can't afford it. With our finances in the mess they are in, I question whether we have the money to fund an orderly exit, so we need to start that exit right now in order to give us as much time to get people out as possible before our dollar becomes worthless and we can't even buy the oil to fuel our military equipment. (That probably won't happen, but if you read the German history as I suggest, you might agree that it is a possibility, however remote.)

In addition, we need to close a lot of bases all over the world. This is a terrible, terrible thing to say, but it is the truth.

The Bush administration has way overextended the treasury. My husband and I have weathered financially difficult times. We know what how to do it. The first thing you do is stop spending. The second thing you do is to keep a very exact record of every cent that you do spend. The third thing you do is review that record and see where you can cut more expenses until your outlays and your income are in balance. First consideration: feed and clothe your children properly. That means that our first duty will be to make sure that the poor among us are fed and clothed. I seriously doubt that Secretary Paulson is thinking of them at this moment. It is Congress's job to appropriate money. So, it is their job, not Secretary Paulson's to decide how money is spent. That is another constitutional violation proposed in this bill. The Secretary would grab the power to appropriate the money received from the sales of the properties. No. No. No. The Constitution specifically gives that power to Congress. Congress should not give Paulson a blank check. That is a violation of the Constitution.

We need to stop here and remember that a major problem in our system is that this administration and previous administrations have so much black budget, secret spending, so many military commitments, so many commitments to pay off leaders of other countries. Our governments are and have been so reckless with money that it is hard to put a stop to it.
Giving the Secretary the authority to spend the proceeds from the sale of American real property assets and other paper will exacerbate that fundamental problem. Let's get back to the Constitution. It is the only way that we can prevent this kind of fiasco in the future.

In addition, the provision that allows the Secretary to enter into contacts without complying with government contract laws and regulations is unnecessary and dangerous. It would, for example, permit the Secretary to sell off American assets to agents of the Chinese government or the Dubai government -- in disregard of the will of the American people and a betrayal of American interests.

Americans can't afford healthcare, spend pitifully little on public education and eat a diet laced with cheap sugar. This bill reflects the stupidity and desire for instant gratification that caused the mortgage crisis as well as the lack of healthcare, the bad education and the obesity.

No. No. No. The Bush administration's so-called bail-out proposal is completely unacceptable. It is the wrong approach at the wrong time. It will just make things worse.

The right approach: Protect the due process and property rights of Americans. That is President Bush's solemn duty. That is the solemn duty of Congress. If they do not protect those rights, they are quite simply traitors all of them. They did not swear to uphold the dollar. They swore to uphold the Constitution. I don't believe the Constitution mentions the dollar, but I know it guarantees our rights to due process to property and to just compensation for a taking.

Other than that, I mostly agree with your post. But first, let's look at the language:

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.

As my OP states, I would not have written this in this manner, but even as it is, it says that decisions made "pursuant to the authority of this act." All this act authorizes the Secretary to do is buy mbs. It does not say that any decision of the Secretary in any capacity is not reviewable; only decisions under this act. Those decisions have to do with what to purchase and how much to pay.

As my OP states, it is badly written and should be revised.

As for the rest of your post, I mostly agree. You might be interested in this debate I had with DUer ProfessorGAC a few days ago about cutting military spending. See posts 2, 6, 11, 12 and 13.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=4035925#4035962

I argued that we must cut military spending by at least 80%, and preferably 90%. If we do, most of our economic problems would be solved.

institutions into agents of the government, enter into contracts without complying with the laws governing government contracts, hire employees (no statement as to what civil service status the employees might or might not have or whether they would be considered political appointees). The authority demanded under the proposed act is very broad and inappropriate. Oh, also, it would give the Secretary the authority to dispose of money at his will without specific appropriation instructions from Congress.

And, yes, I read the proposed bill very carefully several times. It is a power grab and I stand by that.

Thats because you want to believe that Paulson, Bernanke, Bush, Cheney are actually working for the best interest of America and the Constitution, which is totally false.

We are seeing the culmination of 30 years of driving this country into financial ruin for the benefit of the Central Banks. The country can go in two directions at this point. Sell its soul to the Central Banks with a blank check, or abolish the Central Bank and rout its influence from the Government, Supreme Court, and Corporate vassals.

We as a people need to get back to understanding the Law, instead of being buried by the complexity of our Legal System as they steamroll over us.

Even if the Legal System is broken, it is a necessary mechanism to slow down greedy, cunning thieves and it is the only thing that can possibly allow any review of what is happening. That is if they don't seal the records, like they did in the Enron Energy Manipulation scandal, which is what Cheney did.

The Bush Administration has ignored any attempt to review their behaviour by the courts. That's how they thrive in this Democracy, and they are playing us for fools with drones such as Gonzales, Mukasey, Roberts, Thomas, Cox, Paulson, and on and on and on.

Wake Up.

I wouldn't put them in the same category. I have no idea how Bernanke got appointed, but he's not a Bushist, and has spent most of his career studying how to avoid depressions.

Why would anyone who is really honest and ethical want to ruin their good name by being connected to the biggest criminals in the history of this country?! :wtf:

This entire thing is looking more and more to be a scam set up to line Wall Streets pockets. Bernanke benefits too, no doubt.

"Drafting error". That is the funniest thing I have read here. Was that sarcasm?

Because I think it's only those who have a vested interest in the market want this deal.

Meanwhile the rest of us without a stake in the market are ready and willing and happy to tell Wall Street to Fuck Off! :grr: