The bill requires that the Secretary of the Treasury report to Congress no more than seven days after a commitment to purchase a failed financial institution or at $50 billion dollar disbursement intervals. Title 1, Sec. 105, Reports, (b) Tranche Reports to Congress, (b) Timing, page 19, lines 7-24 and page 20, lines 1-10. The only direct option Congress has is the above mentioned "Joint Resolution of Disapproval."
The bill addresses overpayment for troubled firms with the intent of preventing "unjust enrichment." This is done "by preventing the sale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset." Title I, Sec 101, (e) Unjust Enrichment, page 9, lines 15-18.
What if the price the seller paid for the asset was an inflated home price in a down real estate market at the time of a bailout? By paying higher than market value prices, not limited by the bill, "enrichment" would be guaranteed.
Even if that there were a real prohibition that failed firms not make out under this bill, there is an open gate to enrichment, firms in "conservatorship or receivership."
"This subsection does not apply to troubled assets acquired in a merger or acquisition, or a purchase of as sets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code." Title I, Sec 101, (d), page 9, lines 18-23.
Thus, there can be what would be considered "unjust enrichment" if a firm just declares Chapter 11 bankruptcy.
How long will it be before people compare this generous bankruptcy provision for billion dollar firms with the draconian bankruptcy reform bill passed by Congress in 2005?
What if the Public Knew This?
On Saturday, Sept. 27, Gretchen Morgenson of the New York Times reported a remarkable story that may further shake public confidence in the bailout and the man in charge, Secretary of the Treasury, Henry M. Paulson. The Secretary held a top level meeting at the New York Federal Reserve Bank with "the nation's most powerful regulators and bankers." There was only one Wall Street executive in the room, Lloyd C. Blankfein, CEO of Goldman Sachs, the investment banking firm Paulson ran as chief executive before joining the Bush administration.
Discussed at the meeting was the fact that AIG owed Goldman Sachs $20 billion and was about to default. Following the meeting AIG was bailed out to the tune of $85 billion dollars. Paulson's former firm, Goldman Sachs, clearly benefited as a result of the AIG bailout.
How would citizens react to that, were it presented as part of the bailout debate?
They would probably be furious and demand that there be careful consideration and deliberation of this bill. They might even determine that it was blackmail with the people who caused the problem threatening a world financial meltdown if they don't get their way. Then they would connect the dots between the bailout and the head dispenser of funds, Secretary of the Treasury Henry Paulson, former CEO of Goldman Sachs. This firm received huge financial benefits from Secretary Paulson before this bill was even conceived.
The will of the people is just "collateral damage" if members of Congress determine that details like democracy and honesty are less important than the instructions of their leadership and the Wall Street firms that created this problem in the first place.
END
This article may be reproduced in whole or in part with attribution of authorship, a link to this article, and image credit acknowledgment.
