The Mythologizing of the Secretary of the Treasury

1. There is no shortage of curiosities in the current Capital Holocaust.

2. But the one that most strikes me is the (what I judge to be conscious) effort to portray the Secretary of the Treasury as the key, if not sole, official of the Executive Branch, who will be granted extraordinary new powers. The current Secretary is Henry Paulson, and he certainly has been given the role of public front man for the Administration during this crisis.

3. Indeed, the legislation thus far passed, ineffectual though it has been, has specifically identified the Secretary of the Treasury as the beneficiary of the new and far-ranging powers contained therein.

4. Also conspicuous is the relative tangentiality of the current President of the United States to the public debate regarding the economic issues facing the Nation. This in stark contrast to his role in the aftermath of the terrorist attacks of 9/11.

5. The Secretary of the Treasury is appointed by and serves at the discretion of the President of the United States. Any and all powers and authorities of the Secretary vest in Article II of the Constitution, the Article establishing the office and powers of the President of the United States.

6. Yet the media, mainstream and otherwise, insists on reporting the latest events in terms of the powers being granted, by the Legislative Branch, as powers of the Secretary of the Treasury, a position whose power stems from and only from the powers of the President of the United States.

7. Is this merely a semantic quibble? I don't think so.

8. We are witnessing an abdication and creation of power by the Legislative to the Executive Branch of government, with no debate or discussion, only with the obfuscation of substituting the position of "Secretary of the Treasury" for "President of the United States" in the new legislation.

9. In other words, we are witnessing an exponential, stealth explosion in the power of the President, irrespective of party or person. This is being perpetrated by members of both parties in the Legislative Branch in concert with the current regime in control of the Executive Branch. This is as non-partisan an issue as can be constructed.

10. The grotesque dishonesty and blatant contempt for the citizenry inherent in these actions of both political parties and 2 of the 3 Branches of our federal government will been seen as a quantum leap in the de-legitimazation in the eyes of the citizenry of our government.

[The paragraphs in this article are numbered for ease of reference only.]

An Editors' Selection from The NY Times! My Life's Complete

EDITORS' SELECTIONS (what's this?)
September 23, 2008 2:08 pm

Link
That fellow at the Fed, with whom I share a rare last name, seems to have been given the role of sidekick, a sort of Lindsey Graham to Henry Paulson's John McCain. For that reason, and the fact that Bernanke's roots are in the academic world, I'll restrict my comment to Paulson.

If this matter was being adjudicated in a court of law, would Henry Paulson be permitted to preside as the judge? Or would he be compelled to recuse himself?

As a judge, he would be asked to rule on a proposal whose SOLE DIRECT BENEFICIARIES are financial institutions (in the broadest sense of the term,) including the firm of which he was the CEO prior to assuming his judgeship.

He actual role in this matter far out-reaches the role of a judge. He essentially has become judge, jury, prosecutor and defense counsel all wrapped into a tidy ex-Goldman Sachs package. Perhaps the next shoe to drop will be an announcement that Paulson has chosen John Fuld, the CEO of the former Lehman Brothers, as the Bailout Czar-designate to administer the program.

Obviously, Paulson is very bright and is not a crook. But all of the top guys on Wall Street, mega-banks, large insurance and mortgage companies are also very bright, and the outright crooks among them are few and far between.

The fact is, however, that these are the very people who were flying the plane when it crashed!

I'm rambling, sorry.

One final comment, please: So far, there are three public officials who have uttered some sense in this matter: Sens. Bernie Sanders, Richard Shelby and Jim Bunning. How's that for an odd threesome?

— FredrickBernanke, San Diego

Birth of an American Fuhrer: The Paulson Bailout Act

Absolute Power....

The following is the text of the proposed legislation which I refer to as the Paulson Bailout Act.

I have highlighted some passages.The Act speaks to the powers granted to the Secretary of the Treasury. But it is best understood as granting these powers to the President of the United States, as the Secretary is appointed by and serves at the pleasure of the President.

The Founders would shit in their pants if they ever saw something like this. It is nothing less than handing dictatorial, new powers to the Executive Branch without regard to the "checks and balances" written into the Constitution.

If this has already been published here, sorry for the duplication.

________________________________________________________

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.

Treasury Secretary Opens His Eyes

http://www.huffingtonpost.com/2008/03/26/paulson-says-new-financia_n_93527.html


This article is must reading for those interested in the current banking/financial world crisis, a topic I have blogged on here.