Some of you have been asking where I've been. Well, besides this being my busiest season of the year between preserving the harvest and planting the fall garden, I've been sidelined from blogging by a brief trip to the beach and an ongoing obsession with the coming election and recent economic crisis. Not wanting to turn this blog into a place of political rants, knowing that I have readers of different political persuasions just as I have good friends in real life of different political persuasions, I have opted to remain silent about my own political leanings.
But silent I can remain no longer, as I believe Secretary Paulson's bailout plan has far reaching implications for all Americans regardless of political party. I don't pretend to have any answers, but I recognize a bid for power when I see one, and this my friends—Paulson's good intentions aside—is a bid for boosting the power of the executive branch of government via the Department of the Treasury in a way that shuts out both the legislative and judicial branches of government in very, very frightening ways, bypassing the system of checks and balances that our forebears so prudently put into place in the founding of America.
Yet another backroom, weekend deal will be struck and announced perhaps tonight, but this time the administration is seeking congressional approval that will legitimize this unprecedented expansion of executive power by rushing legislation through congress by the end of the week. And please, do not forget, that as much as we may trust Paulson, his motives and intentions, he serves in the cabinet of George W. Bush, a tenure which will expire in just a few months. That we do not know who will inherit these broad-based powers should be enough to motivate us all, regardless of political party, to write, call, email our congressional representatives and urge them not to rush this plan as it stands through congress.
That is my non-partison pitch on the problems with this legislation, but I also believe that the argument for helping Wall Street with what Paulson and Bush call clean and quick legislation without any provisions for helping the taxpayers of America who are being asked to foot this bill is just another example of trickle down economics at play, where taxpayers are being bullied by fear-based tactics into believing that helping the fat cats is best for us as well... much better and cheaper than the alternative, we are being told on just about every news venue on television.
Yet, keep in mind, there are no guarantees that this plan will even work. Wall Street could still crumble, our jobs and retirement funds could still be at risk. But, what we are guaranteed is that our dollar will buy less because this plan, as Ron Paul has argued, is based on inflationary tactics of printing more money and taking on more government debt, guaranteed to result in devaluation of the dollar.
While there are republicans, democrats, and libertarians alike raising concerns about this plan for various reasons, regardless of the politics behind it I urge folks not to stand by and allow this plan to be railroaded through congress as it stands.
Of course none of this even begins to address the problems behind re-establishing the "flow of credit" necessary to continue to fuel the unsustainable consumerism that makes up the U.S. economy... but that's a different rant.
But don't just take my word for it, here are some links that feature multiple opinions to get you started if you're not already obsessively following the story like I am. I'm also including a copy of the email I've sent to my representatives as well as a copy of the plan being considered so folks can read the language for themselves.
The Arena at Politico.com
The Automatic Earth: Debt Rattle September 21, 2008
My letter, for what it's worth:
Dear Representative _____ and Senators _______ and ________,
I strongly urge you NOT to support the $700 billion bailout plan proposed by Secretary Paulson as is. Any Wall Street bailout that falls on the taxpayers of America MUST also include provisions that directly help those taxpayers, not just the financial institutions on Wall Street whose predatory lending practices rest at the heart of the current economic crisis.
I feel strongly that any kind of bail out plan must include help for those Americans currently under or under threat of foreclosure, must include some kind of stipulation against rewarding the financial management of bailed out institutions with golden parachutes, must include some kind of congressional oversight and possible interventions during the 2 year power tenure for the Treasury. I am extremely concerned by the idea of granting overarching powers to the Treasury together with an unprecedented amount of money and strongly urge against that action even with the two year stipulation. Lack of oversight and checks and balances are part of the problem and should not be made part of the solution.
Along those same lines, I am dismayed that the solution to prop up Wall Street depends upon more reckless government spending—deficit spending—rather than fiscal responsibility. Our government is modeling the behavior from both Wall Street and Main Street that got us into this trouble in the first place. The idea that keeping the credit flowing to enable further profligate spending is the answer to our current economic crisis is both irresponsible and wrong headed.
Text of plan:
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 Secretary’s 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.