Hang on, ladies and gents, the Treasury is just getting warmed up. Check out this tidbit from salon.com:
As evidenced by two little-noticed sections of the Obama administration’s Wall Street “reform” bill, presidents and their bank benefactors are back to thinking they can pilfer whatever they want — only now they have learned to camouflage their demands by burying them in the esoterica of lengthier bills.
Finding this latest giveaway means digging all the way down to Sections 1109 and 1604 of the White House’s mammoth proposal. These passages look like typical legislative asterisks — perfunctory “oh, by the ways” inserted by some overeager law school intern in the Treasury Department’s basement as a matter of meaningless parliamentary etiquette.
They are anything but.
At a recent hearing, Rep. Brad Sherman, D-Calif., called the language “TARP on steroids,” noting the provisions would deliberately let the executive branch enact even bigger, more unregulated bailouts than ever — and by unilateral fiat.
Whereas the original TARP included some oversight language and power to limit Wall Street bonuses, TARP on steroids includes no specific oversight or executive pay constraints. Whereas TARP permitted the government to underwrite both small and large banks, TARP on steroids allows taxpayer cash to go only to the behemoths (which, not coincidentally, tend to make the biggest campaign contributions). And whereas TARP limited the Treasury secretary’s check-writing authority to two years and $700 billion, TARP on steroids would let him spend as much as he wants for as long as he wants.
This last point is what poker players call “the tell” — the inadvertent tip exposing a scam. Treasury Secretary Tim Geithner’s tell came when he publicly said the Obama administration would oppose amendments limiting the new bailout power — even if the limit was a $1 trillion cap.
And you thought it was safe to leave your house.
In order to have enough money on hand to rescue financial entities including non banks like AIG, they need a lot of money at hand. In a bizarre kind of way, it might make make just about as much sense to have Treasury handing out the money as Congress, which we know will write in a few goodies for friends.
It would be much better to stop laying such elaborate plans for rescue and start making plans to break these guys up. You dont need a trillion dollars on hand if you are letting them go bankrupt.
Steve
1. Okay, I’ve read secs. 1109 & 1604 of the bill (*), and I’m not seeing the giveaway he’s talking about.
2. I remember 9/29 quite well, too. Upon reading of the House’s initial rejection of TARP, I found myself thinking, “Hmmm…maybe establishment DC _is_ willing to chuck the entire US financial system into the abyss after all.”
3. For better or worse, several of the most important (IMHO) government actions in this crisis were done via executive fiat (whether Presidential or otherwise) with little-to-no Congressional involvement. E.g., the bailouts of Bear Sterns & AIG; the TARP equity injections; and the Treasury money-market fund guarantees.
(*) …to which he provides no link, but methinks this is it:
http://financialservices.house.gov/Title_I_discussion_draft_final.pdf
MI – Thanks for the link, and that’s what I get for not checking the source first. Warning: I’ve yet to look at the .pdf file as I write this. Nevertheless, see my comment under Steve’s post, “History and Tax Cuts” for my feelings on the bank bailouts. I stand without mercy for those institutions.