The New York Times has posted a draft copy of the U.S. Treasury bail out bill.
As a practical matter, this bill gives the U.S. Secretary of the Treasury – the former chairman of one of the Wall Street firms most instrumental in creating the current financial “problem” (or opportunity, depending on whose team you are on) – the power to spend or donate $700 billion in whatever manner he chooses and to pay whomever he wants as much as he wants on whatever terms and conditions he wants to help him do so and give them access to any information he wants. Those who help are free to use that information without liability for any responsibilities related to governmental access.
As a subtext, watch what happens as investment banks with losing derivatives portfolios merge with banks that have deposits covered by FDIC insurance. Small savers are funding a second bailout behind the scenes, confident they are protected by deposit insurance. Small investors too. On Friday, while the large players could execute trades to cover their short positions following the ban on short selling of financial stocks, small investors were frozen out of the system. The explanation was a backlog of trades from the day before.
We are republishing the language here in its entirety. I have boldfaced Section 8 as I want to make sure you seriously contemplate it’s meaning.
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.
@Susan J …”What was started 9-11-2001 has almost been completed”
http://www.rense.com/general83/bdc.htm
http://www.rense.com/general83/vortex.htm
Foxes-hen houses-we know the story but the American people only know that bread and milk are twice what they were 5 years ago and formerly middle class families with two people working cannot afford to buy a home.
Greg writes we can ‘still protest’ but having seen a million people in the streets in NYC before the Iraq war and having seen and known people arrested for protesting at the RNC conventions in NYC 4 years ago and just two weeks ago in Denver-I don’t think protesting has worked.
But now that the financiers are really taking over they don’t want even the possibility that any criminal activity could be challenged in court. And that means any court- I would assume. They are the true masters – criminals – judge – jury and executioner. But the nationalization of Wall St-in the weeks after the 7th anniversary that is the coup that has brought it full circle. What was started 9-11-2001 has almost been completed.
What gives me hope is the possible transformation- I work locally-build relationships close to home. And I listen to people like Catherine Austin Fitts, Ron Paul and others unafraid to speak truth to power.
When are the people of this country going to pay attention to what is being done to them, after the shackles are around their ankles? We must not let this bailout happen. We must free ourselves from the dictatorship of the few wealthy fascists controlling our government.
“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.” This establishes a dictatorship does it not? Just not quite as obvious as Hitler’s takeover. We can still protest all we want.
…only another $10 trillion or so to go.
OCC’s Quarterly Report on Bank Trading and Derivatives Activities First Quarter 2008
“Credit derivatives have grown rapidly over the past several years as dealers increasingly used them to structure securities to help meet investor demand for higher yields. From 2003 to 2007, credit derivative contracts grew at a 100% compounded annual growth rate. Given current credit market turmoil, however, credit derivative growth has eased. In the first quarter, credit derivatives grew only 4%, or $581 million, to $16.4 trillion. Tables 11 and 12 provide detail on individual bank holdings of credit derivatives by product and maturity, as well as the credit quality of the underlying hedged exposures. As shown in the first chart below, credit default swaps represent the dominant product at 99% of all credit derivatives notionals.”
http://www.occ.treas.gov/ftp/release/2008-74a.pdf
U.S. Treasury Credit-Default Swaps Increase to Record
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTuV9vbFtYu4&refer=home
(not to be a stickler Mr. Jenkins, but you’ll need two more zeros to get to a quadrillion…but who’s counting http://www.kokogiak.com/megapenny/)
Neat formula. Create Crisis. Then give more power and money to the criminals that orchestrated the crisis.
NEAT!
Catherine, you should be quite proud of yourself. You, more than any analyst or commentator out there, derived the most accurate model of what is and has been going on in my opinion. Key component of your model – government, corporations, secret societies and black organizations comprise a criminal enterprise, with many interwoven layers, designed to maximize return for an elite using the slow burn – no one gets it although basically the world has been under that model for almost 10,000 years (with the invention of agriculture and the city-state) – but of course turbo charged through the formation of the Central Bank in the USA and elsewhere (emulating England’s) and with advances in information technologies and other technologies used to capture and control information and also control perceptions and behavior.
So congrats to you. We sincerely owe you a debt of gratitude for your hard won wisdom – and for your commitment to sharing that wisdom with us in an effort to achieve a non-zero-sum world.
This bill raises the statutory debt limit to $11,315,000,000,000 – 11.315 QUADRILLION dollars! This is a figure that is several orders of magnitude larger than any debt figure mentioned in the public media. Is this an accurate number, a cyberpub exaggeration, or an accurate representation of the amount of “money” in circulation?