9 Outrageous Things To Know About the Bailout

We all realize that something needs to be done to help our economy, but I’m still not comfortable with what has been done. When the bill was first drafted, it was a wide open door for one man, Henry Paulson, to have unlimited power and control of all the bailout money. Limits have been added since then, but check the things out below that still remain in the bill.

As a reminder of how your government operates, the Senate cannot originate a spending Bill. Article 1, Section Seven of the Constitution says, “All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.” So what the Senate did was pass amendments to the H.R. Bill 1424 that was passed by the House of Representatives. The bill starts out with an amendment to the Employee Retirement Income Security Act of 1974.

When I heard that the bill is 451 pages long, I wondered how they had time to read it since they have been in meetings most of the time. Actually the bailout part is from page 2 to 113, so it is only 111 pages. That is still a lot to read.

Here are some highlights or possibly lowlights.

1. “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. Establishment of the policies and procedures and other similar administrative requirements imposed on the Secretary by this Act are not intended to delay the commencement of the TARP.” (emphasis added) So he can get started before there are any policies.
2. Section 115 states, “Effective upon the date of enactment of this Act, such authority shall be limited to $250,000,000,000 outstanding at any one time. If at any time, the President submits to the Congress a written certification that the Secretary needs to exercise the authority under this paragraph, effective upon such submission, such authority shall be limited to $350,000,000,000 outstanding at any one time.” The total “authority shall be limited to $700,000,000,000 outstanding at any one time.” This is based on the total of the purchase prices of the assets held. So if some of the assets are no longer held, then I guess they can buy more.
3. Section 119 says that the actions of the Secretary shall be subject to judicial review. However, 119 (2)(A) says, “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.” These are the sections that deal with the way the bad assets are to be handled. I guess that this section basically protects the Treasury Secretary from personal lawsuits unless he did something unconstitutional, but it sounds more like it permits him to do whatever he wants.
4. Section 120 states that the authority shall terminate on December 31, 2009. It can be extended for up to two years from the date of enactment if a written certification is submitted to Congress which includes a justification of why the extension is necessary to assist American families and stabilize financial markets, as well as the expected cost to the taxpayers for such an extension.
5. Section 122 increases the statutory limit on the public debt that is in Subsection (b) of section 3101 of title 31, United States Code. The new dollar limitation will be ‘‘$11,315,000,000,000’’. That’s 11.3 trillion. As of January 2006, it was $8,184,000,000,000.
6. Upon the expiration of the 5-year period beginning upon the date of the enactment of this Act, the Director of the Office of Management and Budget, in consultation with the Director of the Congressional Budget Office, shall submit a report to the Congress on the net amount within the Troubled Asset Relief Program under this Act. In any case where there is a shortfall, the president shall submit a legislative proposal that recoups from the financial industry an amount equal to the shortfall in order to ensure that the Troubled Asset Relief Program does not add to the deficit or national debt.
7. The insured amount is increased only until December 31, 2009. “Effective only during the period beginning on the date of enactment of this Act and ending on December 31, 2009, section 11(a)(1)(E) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(1)(E)) shall apply with ‘‘$250,000’’ substituted for ‘‘$100,000’’.” This also lifts the limit that can be lent to the FDIC to pay the insured amounts. In other words, they don’t have that much money. The amount the banks have to pay for the insurance will not be increased.
8. Doublespeak on page 111 that I cannot interpret - “If a payment which is treated as a parachute payment by reason of this subsection is also a parachute payment determined without regard to this subsection, this subsection shall not apply to such payment.”
9. This text is tacked onto the end of the bill on page 451. “Amend the title so as to read: ‘To provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes’.”

You can see the bill for yourself by clicking here.