Bailout Bill Defies Will of the People

Washington, DC — The White House and Congressional leaders from both parties announced a tentative bill to bailout failed financial institutions. The bill is a response to the $700 billion initially request by the White House last week. The bill allocates $250 billion to start with a total authorized of $700 billion. The money will cover the losses of distressed Wall Street firms facing bankruptcy due to bad investments, primarily in risky real estate securities known as subprime securities and “derivatives.”

There were no provisions announced to bailout citizens facing foreclosure or help with their bad investments.

Congress plans vote on the legislation today, Monday, Sept. 29, if the leadership gets their way.

Calls to Capitol Hill are reported to be 30 to 1 opposed to legislation that bails out the rogue Wall Street investors. Public opinion polling has shown a majority opposed to the legislation, unless the question contains the unproven assumption that the economy will collapse in a few days without a bill. In a remarkable show of opposition to the bill, 1,200 marched down Wall Street Friday. There were also protests in Chicago and Ohio plus more planned for Monday, Sept. 29.

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:

“[W]e 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.”

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.

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?

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.

Michael Collins writes for Scoop Independent News and a variety of other web publications on election fraud and other corruptions of the new millennium. He is one of few to report on the ongoing struggles of Susan Lindauer, an activist accused of being a foreign agent, who was the subject of a government request for forced psychiatric medication. This article may be reproduced in whole or in part with attribution of authorship, a link to this article, and acknowledgment of images. Read other articles by Michael, or visit Michael's website.

11 comments on this article so far ...

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  1. HR said on September 29th, 2008 at 2:59pm #

    Dems have a chance to redeem themselves from their shameless complicity in the attempted bailout of the wealthy that has been defeated (at least for now). They can pass bills calling for seizures of assets of the wealthy scum who caused this mess, and they can pass bills reregulating financial transactions. They can pass bills reimplementing the pre-Reagan tax brackets to incomes in excess of $200,000 annually, and cut military spending to a quarter of what it is currently. Of course, they won’t. They will remain committed to their wealthy campaign contributors.

  2. Deadbeat said on September 29th, 2008 at 3:22pm #

    HR is absolutely correct. There needs to be a complete rollback of the last 30 years.

  3. cg said on September 29th, 2008 at 7:38pm #

    Take a look at the bums.

  4. lichen said on September 29th, 2008 at 7:40pm #

    Yes, I agree; will the democrats ever repeal Reagan’s poverty-creation, or will they just keep adding on to it forever (as carter, clinton, and too many in congress to name have done)?

    I’m so glad this bailout failed, I want the government to spend it’s rightfully collected taxes on us for a change.

  5. Michael Collins said on September 29th, 2008 at 8:41pm #

    Well, we saw the rescue package go down in flames and we’re still able to logon the internet, go to work, read, write, eat, etc. The sky has not fallen. The wolf has not eaten all the people in the villeage, yet.

    What we’re looking at, imho, is the dissolution of a technique, the big scare, a variation of the big lie. There were many at all levels of the socio economic scale who opposed this. It was the mass of people who made the difference. We now have a benchmark – 30 to 1 phone calls and a slim but noticeable majority of our representatives will actuall vote to express the will of the people.

    The next thing to watch for is a deliberate tanking of the economy by those who lost today. They’ll not take lightly the loss of their power, even if for a single vote on a single day. They’ll be back to plunder and punish but without the confidence they once had.

    Good for everbody who called and for sites like this were people can reach conclusions without the interference of talking heads the general SOMA of commercial culture.

  6. Unjust Enrichment /Freeze Assets said on September 30th, 2008 at 12:05pm #

    Bail Out B.S. America is now a victim . Even greedy unjust CEOs can not receive unjust enrichment’s by contracts, pay, bonus, award,stocks,land,what ever. By Law victims can go back several years to recover unjust enrichment’s through restitution. The numbers show that Greedy CEO’ s would need to pay back at least $150,000,000,000.00
    As Greedy As one could get.
    Even in the last week Ceo awarded them self $20,000,000.00 bonuses for robbing America to the point of Bankruptcy.
    America becomes a victim.
    CEO’s Force Americans to pay unjust enrichment Bonus
    The evidence show a scheme through a variety of devices,
    withholding fair value,
    the failure to disclose
    misrepresentation of other information and of other material information
    laws which prohibits waivers of the duty of loyalty
    “for acts or omissions not in good faith
    involve intentional misconduct
    a knowing violation of law.”
    breach of fiduciary duties
    without making adequate disclosures.
    liability stems from his position
    engaged in discussions undisclosed
    unjust enrichment
    Freeze CEO’s Assets now and enforce the Law. Americans want restitution now.

  7. Unjust Enrichment /Freeze Assets said on September 30th, 2008 at 4:06pm #

    To put 100’s of billions in the hands that caused the problem. The first thing they will do is give each other a $100,000,000.00 bonus for getting the bail out contract passed so fast. The second thing will be $100,000,000,00 bonus the last 7 day when everything is collapsing. I guess America is Lucky it could of been a lot worse. They could of added as a bonus world domination. Congress would need to over the world ASAP to bail them out. Yes fill up the cup before you stop the leaks. Rem the movie, The Godfather You will know who is guilty for they will be the first to have the answer and want a quick agreement.

  8. cg said on September 30th, 2008 at 7:00pm #

    Here’s the title of the bailout bill.
    Talk about conniving lizards.

    BILL TITLE: To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes

  9. Rich said on October 3rd, 2008 at 7:53am #

    No bail out!!!!!!! This second time around is a bigger joke than the first. Its loaded with things that have nothing to do with the subject and they are nothing more than bribes, pork and sweetners to get it to pass. I will vote against anyone voting for this and get as many others to do the same. Start doing the right thing Washington!

  10. enforcement said on October 5th, 2008 at 10:01pm #

    such as a commercial bank, organized for that purpose. In the United States, the Office of Thrift Supervision (OTS), an agency of the United States Department of the Treasury, is the primary regulator of the fiduciary activities of federal savings associations.
    such as corporate directors, held to a fiduciary duty breach of fiduciary duty in order to prevent unjust enrichment.
    The fiduciary functions of trusts and agencies AIG, Inc., Ameriprise Financial, American Express, Morgan Stanley, and Merrill Lynch.
    each is liable, even though the injury would not have happened but for the negligence of the other

  11. Americas Future said on November 19th, 2008 at 6:16am #

    Congress Need $20,000,000.00 in bail out immediately. My kool aid stand business is about to go in to bankruptcy for $19,999,978.00 if not bailed out immediately. My purchase of $8.00 in kool aid and $2.00 in cups made a total of $32.00 in sales. $32.00 -$10.00= $22.00- my $20,000,000.00 Bonus= -$19,999,978.00 loss. As an 11 year old I am the future of America. Will Congress bail out Americas future?