A Perfect Storm of Housing & Lending Events
This is some unfettered power… ick, ick, ick. The first “accounting” to Congress of just where that money is, and “administrative costs”, can be as long as three months….
I am shocked, and stunned. Read it, and weep. Emphasis and underlines added.
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.
Vietnam era Navy wife, indy/conservative, and an official California escapee now residing as a red speck in the sea of Oregon blue.
Here is a few extracts of an article in a Canadian newspaper on the US financial crises:
WILL WE BUY PAULSON DEBT ACT?
Jacqueline Thorpe, Financial Post
Published: Wednesday, September 24, 2008
… A debt load of 70% of GDP may seem large for the United States but it is certainly not unprecedented globally, says Stefane Marion, assistant chief economist at National Bank Financial in Montreal.
….He points out that Japan’s currently stands at about 170% of GDP, Italy’s at 120% while Canada’s hit 102% of GDP in the mid-1990s, according to OECD figures.
… The question is whether foreign holders of U. S. Treasuries will stick around long enough for the world’s biggest economy to pull yet another rabbit out of its hat.
Full article:
http://www.nationalpost.com/opinion/columnists/story.html?id=eb23608d-6280-4a12-83f5-e0e5c1155af1
Maybe it would be a good time for the US Government to take a good look at Hong-kong financial model. A FLAT-TAX would make economy roll again so rapidely.
Take a look at this VIDEO on Hong-Kong financial theory.
This is a MUST in this time of crisis.
LIBRE MARCHÉ (Free Market)
According to an out of country article Paulson fumbled in testimony. http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4820549.ece
Here is a rebuttle.
http://www.time.com/time/politics/article/0,8599,1843989,00.html
It’s obvious Paulson still has no outline for a plan. According the first article one could say there actually is no problem and Paulson couldn’t prove that person wrong. As for the second article, I believe he won’t get his way. Congress will demand a plan and until Paulson provides a plan that makes sense to Congress, nothing will get done.
It’s going to be very messy as people in Congress try to find out something about how to deal with this solution as Paulson is not their guy. Knowing if the new guys are trustworthy will take some time. The final solution is going to take months and I have no idea what this stop gap is going to look like except it’s going to look very much like the economic equivalent of duct tape and bailing wire.
Somebody has lost their freakin mind.
I say we vote all of them out and recall the rest.
Start clean.
Sarah Palin can be President. Michael Steele can be Vice President.
We can send Mata and Curt and Mike and Scott and Yon to DC to straighten this mess out.
Mata would make a great Attorney General.
Oh, and Skye and the other Scott too. We need a couple of intelligent, sensible Democrats as well to keep things balanced.
Fox News names names in the subprime mess:
Two and a half pages, that’s what I call a clean bill. I like one of the justifications for the lack of details – we haven’t figured them out yet.
This is already a little dated. The final version of the McCain-Schumer Socialist Reform Act of 2008 will be much heftier.
Leadership by Invitation
Isn’t this exactly what John McCain is doing ?
So it now takes an invitation from the President to get Obama to join in the discussions .. LOL
Many of these proposed ‘rules’ have already been modified. Why would the New York Times put out a document that wasn’t accurate? DUH!
I’m a little tired of folks setting themselves up as financial experts on web sites that have, at best, a passing knowledge of the complexity of the credit markets.
Vote hell. I’m for pitchforks, torches, tar and feathers. Then the first order of business for the newly elected officials is to implement term limits and eliminate retirement packages and other perks we pay for them to have the rest of their lives. The political class needs to be eliminated and I fear it will take more than a vote.
That lisping idiot Barney refuses to admit there is a problem and thinks we should be encouraging more loans to low income families! Chuckie thinks FM/FM have done a great job over the years. I rest my case for the thoughts of my previous statement.
What a scam ..
The federal government creates Fannie Mae and Freddie Mac who procede to produce securities of questionable value (but they are assumed to be backed by the federal government). Then when the securities are determined to be of questionable value, the federal government sets up a program to buy them back, on the cheap, while possibly making up to $1 trillion by reselling them when their value is cleared up.
Brings a whole new meaning to “Windfall Profits Tax” .. LOL
Tom Sawyer couldn’t think this big. Samuel Clemens must be laughing in his grave.
There must be a sucker born everyday.
Does this mean the government will purchase the bad mortgages and leave the infrastructure of the companies intact? No and hell no. This needs to be corrected from the bottom up. Carter and Clinton’s social engineering laws need to be repealed. The government needs to keep its nose out of private industry in the future. By that I mean enacting laws that force the companies to lend to bad creditors. The executives of these companies need to be brought to justice for their criminal accounting practices and replaced. The bonuses and raises in salaries they bilked from the companies needs to be returned and the perpetrators fined and jauled. They did it to Enron so why should these companies be exempt.
If the government is going to invest $700 billion then they should temporarally own the companies and put in executives that have experience. Damn, I can’t believe I said that government should take over these companies. But to relieve them of their bad debts and alIow them continue as in the past is unacceptable. All that means is it will happen again. Also I fail to see why we the taxpayers should subsidize the bad mortgagees. They bought houses they could not afford. There is no sense in rewarding at worst pure thievery or at best stupidity.
Which of these two actions would you call leadership: Having a House Majority Leader claiming that restoring the ban on offshore drilling is a top priority next year*, or having a Presidential candidate suspend his campaign to return to his job in Washington to help prevent the nations biggest financial crisis since the great depression**?
Yesterday, over strong objections from the Obama camp and the mainstream media, John McCain decided to suspend his campaign to focus all of his energy and leadership qualities on the nations critical financial crisis that could send this country, (and possibly the world), into economic chaos. Once again, the Maverick has proven that “putting his country first” is not just a campaign slogan, but, by his actions, has shown the leadership that can certainly be called Presidential.
* = http://www.cnsnews.com/public/content/article.aspx?RsrcID=36268
** = Obama’s words
Rightwing, this is what we have until we get a new draft. I understand they verbally have agreed to change some of the dynamics. But the quintessential rule in real estate applies… in writing, in writing, in writing. We have not had public access to a newer draft because there *isn’t* one. How do we know that having lessened the impact of one point, they haven’t increased the impact of another? So far, all we have is “just words”.
This is the draft premise from which they start. It was put out there so that we didn’t have to depend upon what the media and pol mouthpieces were tell us about the legislation. We could read the proposal for ourselves to see what they are *not* telling us.
Well now, you have an interesting attitude. You see websites and blogs are the 1st Amendment in action, as well as a learning experience. People post… then others bash the ideas around, and oft time the dissenting voices put in solid points… and every one walks away with a better grip on the issue.
This seems to bother you. Okay….. I always thought that debate and the 1st Amendment were a pretty darn good thing.
I suggest you worry less about the blogs and laymen who express their opinions, and worry more about those idiots in Congress who genuinely “have, at best, a passing knowledge of the complexity of the credit markets”. We may annoy you, but it is they who are getting ready to hand beaucoup bucks, belonging to you, to a single entitity in the Treasury… with no legal review, unlimited decision power, and semi-annual accounting of all that cash.
Now who’s more dangerous? Those exercising their 1st Amendment? Or those with the stroke of the legislative pen, giving the Secy of the Treasury that much authority and cash?
~~~
Fit Fit… is it possible you and I find ourselves on the same page here?? Ah.. those rare moments of unity should be savored.
BarbaraS… I can’t believe you said that either… LOL
We’re not forgiving debt (like a bankruptcy), but buying notes at fire sale prices … paper backed by over valued property assets. Funny, they don’t want the banks to sell them at fire sale prices, but it’s okay if the government buys them at fire sale prices…. still having fun wrapping my mind around that one.
But back to it… repercussions for that purchase means the government places these participating companies in the status of 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;
Not owned by the government, but certainly controlled. A quasi socialism agreement. Like Neo says, brings a whole new meaning to Windfall Profits tax. Under that notion, the Obama government wants to control how much a company can make, with the gov’t taking the overage… but the company stays privately owned.
With this, the company stays privately owned, but is under the control of the government as a “financial agent”. And how long does that last? Afterall, this is a purchase, not a loan. Are they “financial agents” for the rest of their existance?
Like Fit says… they’re slamming this thru when they haven’t figured out the details yet.
FBI INVESTIGATING POTENTIAL FRAUD BY FANNIE MAE, FREDDIE MAC, LEHMAN, AIG
Tuesday, September 23, 2008
http://www.foxnews.com/story/0,2933,426783,00.html
It’s about time the FBI puts his nose in these companies. Just hope these investigations will not be too long. Anxious to see the results.
If John McCain is so concerned about getting some sort of legislation passed, why did he admit he hadn’t even read the proposal the day before he suspends his campaign?
They started discussing this last Friday. The bill is only two and a half pages long and he can’t be bothered to read it?
As you said, Fit… it’s only a few pages long. Since the standard routine of Senators is not to read legislation, but be briefed on the content instead (I hate that practice, BTW… but it’s the way they work), I’m not surprised he didn’t read it. That, however, does not mean he doesn’t know what’s in it.
Also, the only draft we have, which I provided here, was written prior to the 20th of Sept. There are already verbal changes discussed. So until anyone can see a final draft, it’s rather a moot point.