Administration Seeks an Out On Bailout Rules for Firms - Officials Worry Constraints Set by Congress

[williesgirl]

Source: Wash Post

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

snip

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.

snip

This strategy has so far attracted little scrutiny on Capitol Hill, and even some senior congressional aides dealing with the financial crisis said they were unaware of the administration's efforts. Just two weeks ago, Congress erupted in outrage over bonuses being paid at American International Group, with some lawmakers faulting the administration for failing to do more to safeguard taxpayers' interests.



Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040303910.html?hpid=topnews

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This is bullshit and must not be allowed to happen. This is not the CHANGE I supported Obama from the very beginning to see occur. I'm so mad I probably won't sleep tonight.

[DJ13]

1. Protecting the wealthy to this extent is what I expect from Republicans

NOT from Obama.

This is disheartening.

[truedelphi]

16. When I first heard the term "The Money Party" I didn't know what it really meant

And at that time, I never thought the Powers that Be would let us win an election. But apparently, Bush was put in place to allow a huge portion of our economy slide away from us into the hands of the War and Defense industries.

Now Obama has been allowed to take his place, providing he offer what is left of our economy to the banking class.

It's all one big party. Or one big club. George Carlin tried to tell us. And most of us are not in that club.

[rwheeler31]

2. This is not working.

[bvar22]

14. Of course it is working....

Billions flowing into the pockets of the top campaign contributors.
It is working EXACTLY as it is designed to work.

[shraby]

3. I notice it says "government officials" no names,

no political affiliation, no nothing. For all I can discern, it may be Republicans trying to undermine Obama. This is not an article that calls for no names.

[amandabeech]

4. Special purpose vehicles to get around the laws about executive compensation?

These are Democrats?

I doubt if I'll sleep well tonight.

[Amonester]

5. pay limits discouraging financial firms from participating??

"officials at the Treasury and the Fed said they worry harsh pay limits will undermine critical bailout programs by discouraging financial firms from participating. Although many of these companies could survive without government help, they might lack money to ramp up lending, which officials consider critical to turning the economy around."

FIRE their CEO.
If that doesn't do, then FIRE their board.
If that is not enough, then FIRE their veepees...
"trickle down" until newly HIRED execs will "put the country FIRST"

Problem solved.

[aquart]

9. And it IS that simple.

[gulfcoastliberal]

6. They are using Enron-inspired "SIV's" to ensure their cronies pay can't be touched by congress!! K&R

If this was *co we'd rightly be screaming about how immoral, not to mention illegal, this is.

Welcome to fascism. Obama apparently thinks as much of congress as bush did.

[FrenchieCat]

7. Sure......

sounds like some Republican left over officials to me.

Of course the WAPO only prints the truth, except for when they don't! :eyes:

[Pale Blue Dot]

15. U.S. aims to help firms sidestep bailout rules

Obama administration seeks to avoid restrictions, including limits on pay

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

http://www.msnbc.msn.com/id/30040075/

Can you tell us where and how they're lying, please?

[FreakinDJ]

8. "sources familiar with the matter said. "

is that like an internal memo

[mbperrin]

17. From the link: Andrew Williams is named.

Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, said the congressional conditions should apply to any firm benefiting from bailout funds. He said he planned to review the administration's decisions and might seek to undo them. "We have to make certain that if they are using government money in any sort of way, there should be restrictions," he said.

A Treasury spokesman defended the approach. "These programs are designed to both comply with the law and ensure taxpayers' funds are used most effectively to bring about economic recovery," spokesman Andrew Williams said.

[D-Lee]

10. Very strange article - sources and logic not explained

The article identifies no sources.

The article seems to imply that the same controls which would govern the TARP program (in which the government has an ownership interest in entities which received federal money) somehow should apply to any purchasers under the entirely different "toxic asset" program.

Here is a link which gives a statement of the differences between the two programs:
http://www.nytimes.com/2009/04/04/opinion/04ohanley.html?th&emc=th
("AMERICAN taxpayers today own a significant chunk of Citigroup, American International Group and other financial institutions, thanks to the Troubled Assets Relief Program. Therefore, they also own, indirectly, a slice of the toxic assets that reside on the balance sheets of those institutions. And now taxpayers will end up owning even more of these troubled assets, thanks to the Public-Private Investment Program recently announced by Treasury Secretary Timothy Geithner.")

There is no explanation of the logic of the underlying proposition that controls should or could be applied here.

Just strikes me as odd and uninformative ...

[lostnotforgotten]

11. Once Again - A Big Obama Fail - See The Bill Moyer's Videos Here For More Corroboration

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x292268

[ozymandius]

12. NO! HELL NO!

A segment from a post in the video forum regarding William Black's appearance on Bill Moyer's program is appropriate here:

The point is that most, if not all, of the eight largest banks in America are insolvent based on an equation that examines the balance of equity of deposits, first tier assets, market capitalization and how much bailout money they've received.

This basic information needs to be directed to our Congressional representatives to plainly say that (A) we first must get rid of the liars and incompetents like all the bank CEOs, Geithner and Summers. Then we must (B) have a non-partisan (not bi-partisan - there is a difference) discovery process to zero into specific failings, who is responsible for them, and where existing laws should provide a remedy for their failure. The last point of action is (C) deal appropriately with these banks. Shut them down. Put them into receivership. Break them into little pieces. Write off the losses. Prosecute those responsible for fraud and for aiding and abetting fraud.

After all of the above is done then we can start to make our way forward by enacting new laws with stout reinforcement with competent people.

Bold text is most important to me. No one in a position of power has any business making policy when they are effectively captured by the banks.

[No Elephants]

13. Clincial depression AND economic depression. Good times.

[truedelphi]

18. Like good ol' FDR said

I'm paraphrasing "It's every bit as dangerous to deal with organized banking as organized crime families."

And it really is.

Will someone wake Obama up!?! Please?!?

[Political Heretic]

19. This bailout keeps becoming more and more of a nightmare. AND:

What the fuck is the administration doing acting like the last administration trying to side-step the law and go around congress??