Washburn's World

My take on the world. My wife often refers to this as the WWW (Weird World of Washburn)

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Location: Germantown, Wisconsin, United States

I am a simple country boy transplanted from the Piehl Township in northern Wisconsin to the Milwaukee metropolitan area who came down "sout" in 1980 for college and have stayed in the area since.
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Wednesday, October 01, 2008

The Paulson Plan: Take 3

The plan by the Bush/Paulson/Bernanke team to create the post: Emperor of the Treasury, is now up to 451 pages. The Paulson Plan: Take 1 was 3 pages; Six if you count the 3-page battle plan. Then Wisconsin Congressman Paul Ryan wrote the 110-page Paulson Plan: Take 2.

As I predicted earlier this morning, the current Senate bill, Paulson Plan: Take 3, has the three, core, non-negotiable points:
  • The Secretary of the Treasury can acquire anything even Microsoft with no check or balance on this power by any authority except the limits of his whimsy.
  • The Secretary of the Treasury gets to set the "price" with "such terms and conditions as determined by the Secretary".
  • No Judicial review or very limited Judicial review
The Secretary of the Treasury can acquire anything
  • Section 3(9)(B) reads:
    • The term "troubled assets" means any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
  • Section 101 (c)(5) reads:
    • The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation ... Issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities or purposes of this Act.
    • Terms such as "troubled asset" and "financial institution".
The Secretary of the Treasury gets to set the price
  • section 101 (a)(1) reads:
    • The Secretary is authorized to establish the Troubled Asset Relief Program (or "TARP") to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.
Limited, if any, Judicial Review
  • Section 119 (a)(2)(A) reads:
    • No injunction or other form of equitable relief shall be issued against the Secretary for actions pursuant to section 101, 102, 106, and 109, other than to remedy a violation of the Constitution.
      • Sec. 101. Purchases of troubled assets. [Good, Bad, or Rapacious]
      • Sec. 102. Insurance of troubled assets. [Prudent or Foolish
      • Sec. 106. Rights; management; sale of troubled assets; revenues and sale proceeds. [Sales of, by, or to financial cronies]
      • Sec. 109. Foreclosure mitigation efforts. [Judges re-write Mortgages]
  • Section 119 (a)(3) reads
    • No action or claims may be brought against the Secretary by any person that divests its assets with respect to its participation in a program under this Act, except as provided in paragraph (1), other than as expressly provided in a written contract with the Secretary.
    • Even if that participation was not consensual.
    • Since the Secretary gets to define such terms as participation. The is Section 8 of the Paulson Plan: Take 1, but with more words. The effect is that anyone accepting or, more importantly, forced to exchange assets for money on such terms as the Secretary determines has no standing in court to bring suit. No Standing equals No judicial Review
As I have stated here, here, here, here, here, and here, this bill is not about money, mortgages, or market stabilization. It is about power; naked, unfettered power. It is about creating a financial dictator in the aftermath of an economic 9/11 event. It is about herding and driving American Taxpayers over an economic buffalo jump


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