Sept. 25, 2008 Wall Street bailout protest Video
This public stance developed in spite of dire warnings of a national and global collapse of the economy should the legislation fail to materialize. These predictions are not universal, by far. A public appeal by 200 economists opposes the congressional rush to judgment, summarized in these terms:
" --- we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come." Story: McClatchy Newspapers, Sept 25, 2008, Open letter & signatures
Concerns about Proposed Bailout Bill
The original bailout proposed by the White House gave the Secretary of the Treasury unlimited discretion in doling out $700 billion and barred any Congressional or judicial review. The new legislation calls for "consultation" with the following entities. Please note that not one of those to be consulted is an elected official and that Congress is out of the loop.
"(b) CONSULTATION.-In exercising the authority under this section, the Secretary shall consult with the Board of Governors of the Federal Reserve System, the Corporation, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, and the Secretary of Housing and Urban Development." Title I, Sec 101, (b) "Consultation" page 7, lines 18-23 and pages 15, lines 23-24, and page 16, lines 1-9.
The people get involved in the decision making process, presuming Congress is listening. Sec.115. Graduated Authorization to Purchase (pages 40 - 49) provides an option to overrule any particular bailout. Congress has 15 days after a purchase notice by Treasury to introduce a joint resolution disapproving of the bill. The resolution has a tight window to passage, three days, and is subject to a presidential veto. The "fast track" aspects of this guarantee the same types of hurried votes characterized by a majority of members failing to even read a proposed bill (e.g., The Patriot Act).
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?
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