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.
Section 8? That's crazy!
Posted on 09/21/2008 11:31:36 AM PDT by Revel
The Mother Of All Frauds
Video to go with This:
http://www.youtube.com/watch?v=MO6P_yjKFR4
Well now we have it - since this is a proposed bill (public) and in the interests of fair use, here you have it as reported by Fox:
LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY
TO PURCHASE MORTGAGE-RELATED ASSETS
Section 1. Short Title.
This Act may be cited as ___________________.
Sec. 2. Purchases of Mortgage-Related Assets.
(a) Authority to Purchase.—The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
(b) Necessary Actions.—The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts; (3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and
(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.
Sec. 3. Considerations.
In exercising the authorities granted in this Act, the Secretary shall take into consideration means for—
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer.
Sec. 4. Reports to Congress.
Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.
Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.
(a) Exercise of Rights.—The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.
(b) Management of Mortgage-Related Assets.—The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.
(c) Sale of Mortgage-Related Assets.—The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.
(d) Application of Sunset to Mortgage-Related Assets.—The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretarys authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time
Sec. 7. Funding.
For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.
Sec. 8. Review.
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.
Sec. 9. Termination of Authority.
The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.
Sec. 10. Increase in Statutory Limit on the Public Debt.
Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.
Sec. 11. Credit Reform.
The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.
Sec. 12. Definitions.
For purposes of this section, the following definitions shall apply:
(1) Mortgage-Related Assets.—The term mortgage-related assets means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.
(2) Secretary.—The term Secretary means the Secretary of the Treasury.
(3) United States.—The term United States means the States, territories, and possessions of the United States and the District of Columbia.
I'm speechless.
Let's disassemble this monster piece by piece.
First, this is a de-facto nationalization of the entire banking, insurance, and related financial system. Specifically:
"(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;"
That's right - every bank and other financial institution in the United States has just become a de-facto organ of the United States Government, if Hank Paulson thinks they should be, and he may order them to do virtually anything that he claims is in furtherance of this act.
This might include things like demanding that a bank or other financial institution sell him its paper, even if it forces that firm to collapse and be assumed by the FDIC!
You didn't buy any bank stocks last week did you?
"(a) Authority to Purchase.—The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States."
This, at first blush, would seem to indicate that only American firms would be covered. Nothing is further from the truth. If the Chinese wish to unload some of their purchased toxic sludge they merely sell it to, oh, Goldman Sachs for 40 cents on the dollar and then Goldman sells it to the Treasury for 50. This, under the black letter of the law here, is perfectly legal, which means that one must assume that Paulson will in fact foist off all the bad paper on world markets that was originally based on a mortgage in the United States, while allowing his banker buddies here to loot the taxpayer by acting as an intermediary in the transaction!
"(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;"
Contracts can (and presumably will) be "no bid, no solicitation" and given to whomever Secretary Paulson favors, without regard to the public interest or normal competitive bidding processes. Must be nice to be a "Friend of Hank."
"In exercising the authorities granted in this Act, the Secretary shall take into consideration means for—
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer."
Notice which comes first.
"(c) Sale of Mortgage-Related Assets.—The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act."
Having bought these securities for any price Mr. Paulson would like (and he can compel institutions to sell at his demanded price as noted above!) he can then sell those assets at any price he wishes, to anyone he wishes. It certainly is nice to be a "Friend of Hank", and it most certainly sucks if you're not.
"The Secretarys authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time"
This is clever and nobody in the mainstream media has figured it out.
If you think the cost of this bill is $700 billion, you're wrong. The cost is actually infinite and the entire bill constitutes a giant money-laundering scheme.
Paulson can (and presumably will) buy up to $700 billion of these "assets", then sell them. Let's say he decides to buy them at 60 cents on the dollar and sell them for 10. You, the taxpayer, will eat the fifty cents, for an immediate cost of $350 billion dollars.
Having done so, he is then authorized to do so again, since the $700 billion is no longer on the government's balance sheet.
In fact, he can do this without limit, other than possibly due to the federal debt ceiling, which of course Congress will raise any time we get close to it. Oh yeah, this bill does that right up front too. No need to bother with it the first time around.
Folks, $700 billion isn't even close to the total cost of this monster.
If Paulson and his successor decide to, they could literally cycle all $5.3 trillion of Fannie and Freddie's debt through this scheme, potentially sticking the taxpayer for 20% or more of the total, plus as much private debt on various bank balance sheets as they can manage to nationalize until (and possibly beyond) the point where the bond market tells him to go to hell.
Bottom line: This bill gives Paulson the ability to nationalize an UNLIMITED amount of private debt and force YOU AND YOUR CHILDREN to pay for it.
Sec. 8. Review.
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.
If you are a bank, investor, or other entity who is forcibly gang-raped by Secretary Paulson due to his actions as "King" (crowned by Congress) under this law, you are unable to seek redress in the courts or by administrative action.
The claim is that this is intended to "promote confidence and stability" in the financial markets.
It will do no such thing.
It will instead strike terror into the hearts of investors worldwide who hold any sort of paper, whether it be preferred stock, common stock or debt, in any financial entity that happens to be domiciled in the United States, never mind the potential impact on Treasury yields and the United States sovereign credit rating.
I predict that if this passes it will precipitate the mother and father of all financial panics, although exactly when the "short bus" riders who inhabit the equity market will figure it out remains to be seen.
If they have an IQ larger than their shoe size it will commence at 9:30:01 AM Monday morning, although given history and the lack of intelligence displayed by the crooning media market euphoria may continue until the first couple of firms are dismantled by Paulson's newly-crowned Kingly powers with the scraps handed out to his favored few.
The best part of this outrageous fraud is that those who get bent over the table can't even sue - their only recourse will be the (literal) deployment of pitchforks and torches.
That Paulson and Bernanke circulated this document, irrespective of what actually gets reported out onto the floor of the House and Senate (if anything) tells you everything you need to know about his intentions and the safety of your financial assets in the United States markets.
That this "proposal" hasn't resulted in Congress calling for both Bernanke and Paulson to resign for their blatant attempt to crown Paulson King tells you everything you need to know about Congressional integrity as well.
My advice: Don't be caught with any stock or debt instruments linked to a United States financial firm in your portfolio past 9:30 AM Monday morning.
I would also like to add that his guy has been calling this almost completely correct since I started reading him last year. He simply has a brilliant ability to see through the haze. His experience in the both the business world and in trading seems to really give him an edge.
Any member of the congress that votes for this pig will never deserve to be reelected anywhere anytime. It should start out we hereby make paulson king of the world.
Copy and paste links.
Paulson, Democrats Clash on Elements of Financial Rescue Plan.
(Paulson arguing with congress over Bank CEO’s pay.)
www.bloomberg.com/apps/news?pid=20601087&sid=aU6qDGz0zlao&refer=home
Financial crisis: Default by the US government is no longer unthinkable
www.telegraph.co.uk/money/main.jhtml?MLC=/money/city_news&xml=/money/2008/09/21/ccliam121.xml&CMP=ILC-mostviewedbox
They are working overtime, warning all that this must all be done and complete by tomorrow morning. It's mind bending.
The day after the first debate Obama’s going to have a “surprising boost in online contributions”, I’m guessing around $1 billion.
I agree. This guy is one of the few who really sees things for what they are. I’ve also been reading his posts for over a year and have truly been amazed at his prescience on the market. I also agree that he holds both parties accountable and holds no favorites.
Absurd fear-mongering.
It’s a “de-facto nationalization of the entire banking, insurance, and related financial system”!!!! Yeah, right.
Where was this jerk when Congress under Clinton, Cuomo, Dodd and Barney Frank “de-facto nationalized” the entire residential mortgage market by rigging it to generate $1 trillion of garbage loans to low-income, no job, no asset borrowers in the name of diversity and political correctness??
“They are working overtime, warning all that this must all be done and complete by tomorrow morning. It’s mind bending. “
I don’t think they want the public to get a chance to hear what all of this plan really is. They want to get it done before any backlash can start. One can say that they want to “Protect” the markets. But this bill goes so far past all of that even if you think that it will protect US economy long term. This bill gives us Paulson the power of a king in the economy...And with taxpayer money.
No Doubt complaining as I have heard him do before. Why don’t you email him and ask him.
Reminds me of McCain-Kennedy Amnesty bill. The critters can really `whip snakes’ when their employers are resting. And vice versa.
“Treasury Seeks Asset-Buying Power Unchecked by Courts”
www.bloomberg.com/apps/news?pid=20601087&sid=acVoMK3FiuqQ&refer=home
I wonder if that includes security default insurance or CDS? Those are the real problem, not the MBS and their ilk which are mostly written off already. Your columnist is a populist which is a popular position these days, but the fact is that these security positions need to be unwound slowly and deliberately. It is not a bailout for some people to get rich (or stay rich) but an intervention to keep the financial system from melting down (essentially to reduce the default risk of major security counterparties)
I am sure by the description that they do include those And they amount to tens of trillions. Yes they want to unwind them all right. They want to unwind them right on to the US taxpayer. Then the bankers having been made whole again want to get started on there next ponzi scheme. But will we even be economically viable enough for that after they get done with this?
I think you need to read Mr. Denninger’s criticisms more carefully. His first point was that Secy Paulson was CEO of Goldman Sachs and a willing, active participant in the bad decisions that started this mess. The text of the bill itself seems unconstitutional because it denies the public redress of grievances in the courts. That cannot be allowed to stand.
Exactly right. They will “tighten up” lending standards to make it look to everyone that they’re on the up and up.
A year from now, they’ll say “Well, we have to loosen things a bit because the housing market is so slow...”
Same old tune. Except next time it will be even more expensive.
The populist response is tempting (I noticed JimRob is advocating it), but the immediate pain from that would be fatal. People don't realize that they can die from pain even if a lot of the body is not injured.
“public redress of grievances in the courts?”
I can assure what we will see if there is no protection for the Treasury Department (replace “Treasury Department” with “taxpayers’ wallets” in this sentence).
Treasury will be intervening in the markets by making stabilizing bids and purchasing and selling mortgage-backed securities on the open market.
Our securities laws contain broad and nebulous prohibitions against “market manipulation.” The law authorizes class action lawsuits against any financial institution that plaintiffs lawyers can convince a judge or jury engaged in “market manipulation.”
Treasury (our wallets) will be exposed big time to these lawsuits. No doubt even John Edwards will manage to rouse himself from his mistress’ bedside to get in on the billion-dollar bonanza of Rat lawyers bringing class action cases before Rat judges and channeling the “small investor” who was “taken advantage of” by Treasury (our wallets) to the tune of billions in damages (35% to the plaintiffs lawyers).
Our twisted legal system will just mean a big payday for the trial lawyers.
Section 8 may well be too broad, but there MUST be some protection from taxpayers against lawsuits that are as predictable as the rising sun. Perhaps a special sovereign immunity act extended to Treasury’s purchases and sales would be sufficient.
“security default insurance” Are you referring to `personal mortgage insurance’—what those of us paid who took out 80% fixed rate loans, but lacked the total 20% down?
I doubt many sub-prime loans required PMI.
But that’s OK. Uncle Sugar’s going to make everything all right ...
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