Quote of the Day: "[The bailout] was socialistic in every way. It rewarded market failures. It ripped off average families for the sake of billionaires. It was the worst form of Keynesian planning. It was an open conflict of interest, as the ex-CEO of Goldman Sachs funneled vast sums to Goldman Sachs. It had exactly zero chance of helping the economy. In fact, by draining productive private resources necessary for economic recovery, it makes a bad situation worse." -- Llewellyn H. Rockwell Jr.
Subject: What is a troubled asset?
When Congress passed the Big Bailout they thought they were giving the Treasury Secretary nearly a trillion dollars to save the credit markets by purchasing and re-packaging bad mortgage securities.
Secretary Paulson didn't deliver the plan he sold. Instead, he invested $250 billion in the nation's largest banks.
This means that only $100 billion of the original $700 billion Bailout will have gone to purchase bad mortgage securities.
Don't get us wrong. We like it when the government doesn't spend our money. But we won't applaud Paulson for "fiscal responsibility." The fact is, Paulson sold one plan, and delivered another. He was supposed to buy "troubled assets." Wasn't he? The bailout bill defines "troubled asset" as:
"(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages . . . the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability."[emphasis mine]
In other words, a "troubled asset" didn't have to be troubled. Paulson could have purchased (nationalized!) America's strongest companies if he determined it would "promote market stability."
Did anyone in Congress actually read this definition of "troubled asset?" Unlikely.
Did they realize the implications? Unlikely.
Did they stop to consider whether $700 billion, $250 billion, $100 billion, or no money whatsoever was needed to bailout Wall Street? Unlikely.
Did they even have time to make an informed decision on the Bailout bill? Definitely not.
What if the Read the Bills Act (RTBA) was in force when the Big Bailout was considered?
- Congress would have had to sit through a public reading of the bill, giving them the opportunity to question provisions such as this odd definition of "troubled asset."
- The bill in its final form would have been posted on the Internet for seven days before Congress voted.
The RTBA would have:
- imposed a waiting period on the Bailout bill, allowing cooler heads to prevail
- given the public a chance to read the bill and provide Congress with informed feedback
- allowed vague and objectionable portions to be exposed to Congress and the public, making it less likely they would survive the amendment process
Before Congress will feel the pressure to oppose bills like the Bailout, it must first feel the pressure to support the Read the Bills Act. And Congress will never pass the RTBA unless they fear for their own jobs. We must instill that fear by constantly . . .
- Applying pressure on Congress to pass RTBA
- Recruiting our friends and family to join Downsize DC and do the same
To that end . . .
- Please forward this message to others
- Re-post it on your own blog
- Digg it at our blog
- Use our quick and easy Educate the Powerful System to send Congress another message in support of DownsizeDC.org's "Read the Bills Act"
Use your personal comments to express disappointment that the bailout bill's "troubled asset" definition empowered the Treasury Secretary to buy anything he wanted.
You can also promote RTBA by joining the Read the Bills Act Coalition. Add a Coalition button, banner, or tower-ad to your website, and we'll list it on the main page at DownsizeDC.org and announce in a Downsizer-Dispatch like this one, reaching over 24,000 subscribers. For more information, write to email@example.com.
This week we welcome four new members to the Coalition:
Thank-you for being a part of the growing Downsize DC Army.
Assistant to the President