U.S. aims to help firms sidestep bailout rules (with commentary:)

[Political Heretic]

I wanted to give some commentary on recent news that has been posted on the DU boards a few times today... I'm stunned.

U.S. aims to help firms sidestep bailout rules
Obama administration seeks to avoid restrictions, including limits on pay
http://www.msnbc.msn.com/id/30040075/
(MSNBC)
Correlating article posting also in the Washington Post

EDIT - CORRECTION, the story was written by the Washington Post first, then picked up by MNBC, and The NYTimes Online.

So here is the "holy shit" moment:

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.

I'm sorry but this is precisely what the Bush Administration is famous for. Am I saying Obama is identical to Bush? Of course not. Which is why this is such a disgrace! I thought we were passed the days when the Executive Branch would look for every underhanded backwards way to undermine the rule of law and the separation of powers and operate against Congress on its own?

I included the second paragraph in the quote above, so that its clear I understand the "reasoning" for attempting to subvert congress. I simply think its outrageous.

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. The administration has decided that the conditions should not apply in at least three of the five initiatives funded by the rescue package.

So to all the people who are pushing back against critics of the bailout plan, saying that the plan would include "tough regulations" on the people getting the money - this is what we have to show for that. Here is our administration, actively trying to get out of all the regulation and oversight of how this money is handed to Wall Street. Does not that dumbfound and outrage you??

But let's look at exactly what the administration is doing and see what it looks like:

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.

Well holy shit. I've been sitting here for ten minutes trying to figure out how to calmly write about this. I've read plans like this before - plans by criminal conspiracies setting up mechanisms to defraud the government. Only this time, its our President. What in the hell is going on?

I'm not the only one that things so:

"They are basically trying to launder the money to avoid complying with the plain language of the law," said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. "They are trying to create a loophole to ignore Congress, and I think the courts will think that it's ridiculous."

The federal watchdog agency overseeing the bailout is looking into the matter, trying to determine whether the Treasury's actions are legal.

And then of course, there's President Obama himself, calling for the very restrictions that his administration are now quietly trying to unscrupulously sidestep:

Obama himself has called for these limits. "We've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street," he said earlier this year.

There is literally no one on this board who shouldn't be at LEAST deeply troubled if not totally outraged by this! What is going on??

[mvd]

1. I just don't understand this at all

Is there something I'm missing? Why would Obama want to look soft on these firms? Just trying to be fair.

[Zynx]

2. This pisses me off if it is what it appears to be.

I will be cautious in expressing outrage until I see a bit more than what we have seen so far on this point.

[Political Heretic]

3. I too, want to see much more. I find this to be confusing and unexpected.

I find this to be confusing and unexpected.

I didn't like the administrations plan, but never in my life would I expect them to so blatantly try to run around regulation and checks and balances that they have SWORN BY both in the campaign and after Obama became president....

Never expected something this severe....so I feel confused and hope that a lot more info comes out!

[Zynx]

4. At first blush, this makes me very angry, but I want to see more on this before I get truly pissed.

Initial news reports sometimes miss nuances that creep in later.

[Thrill]

5. Sounds to me like banks want to give it back with these restrictions

defeating the purpose of trying to get them to ease credit. So the Administration wants to make changes so they will accept the funding and hopefully start lending.

[Political Heretic]

6. I'm quite sure that's the reasoning. Which to me, only underscores what a shitty plan it was

to begin with.

The only way this plan works is with no regulatory oversight. But no regulatory oversight will guarantee that the plan doesn't work! :crazy:

Meanwhile, if the administration needs to make change so they will accept the funding, the way to do that is certainly not to BACK DOOR CONGRESS JUST LIKE WE HAD TO LIVE THROUGH FOR THE PAST EIGHT FUCKING YEARS.

[OHdem10]

7. I have heard many wise people say, never expect too much and

you will not be disappointed. They were referring to the fact
that many believe there is not too much difference --no matter
which party wins an election.

Do I Believe Obama deliberately misled us. Of course, not.
I do believe that once a person becomes President he, she
learns real fast--there is a lot of built in power in this
country and there is only so much a President can do.
Business has much more power and control than we realize.

It will take time to make real change. This takes nothing
from Obama. I just hope he has the courage to change what
he can.

[Political Heretic]

8. Well said.

I don't believe Obama deliberately misled people either.

But I do believe it was within his power to push for a different strategy on this financial crisis and I regret that he did not.

[SpartanDem]

9. If true

I would definitely be disappointing that said until I hear more from the administration themselves about this I going to reserve judgment.

[MercutioATC]

10. Not a problem. There will be STRICT OVERSIGHT.

...well, that's what I was told by a DUer last week when I suggested that this plan was inherently subject to HUGE abuse by the financial institutions.

[Political Heretic]

11. I know right? I was told that too!

[Political Heretic]

12. Is anyone reporting on this today? I'd like to get a comment from the WH or some confirmation