I am officially confused: Obama administration looking to allow sidestepping of bailout rules

[dajoka004]

For some reason I can't copy it into here. Read the article please.

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

I don't really think you need much more proof that this has all been a scam to funnel money to the big banks.

 

[nnarum]

25k posts huh?

U.S. aims to help firms sidestep bailout rules
Obama administration seeks to avoid restrictions, including limits on pay

By Amit R. Paley and David Cho

The Washington Post

updated 10:08 a.m. CT, Sat., April. 4, 2009

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.

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.

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.

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.

Middleman
In one program, designed to restart small-business lending, President Obama's officials are planning to set up a middleman called a special-purpose vehicle - a term made notorious during the Enron scandal - or another type of entity to evade the congressional mandates, sources familiar with the matter said.

In another program, which seeks to restart consumer lending, a special entity was created largely for the separate purpose of getting around legal limits on the Federal Reserve, which is helping fund this initiative. The Fed does not ordinarily provide support for the markets that finance credit cards, auto loans and student loans but could channel the funds through a middleman.

At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private.

Obama's team is also planning to exempt financial firms that participate in a program designed to find private investors to buy the distressed assets on the books of banks. But Treasury officials are still examining the legal basis for doing so. Congress has exempted the Treasury from applying the restrictions in a fourth program, which aids lenders who modify mortgages for struggling homeowners.

Lavish pay practices
Congress drafted the restrictions amid its highly contentious consideration of the $700 billion rescue legislation last fall. At the time, lawmakers were aiming to reform the lavish pay practices on Wall Street. Congress also wanted the government to gain the right to buy stock in companies so that taxpayers would benefit if the firms recovered.

The requirements were honored in an initial program injecting public money directly into banks. That effort was developed by the Bush administration and continued by Obama's team. The initiative is on track to account for the bulk of the money spent from the rescue package. All the major banks already submit to executive-compensation provisions and have surrendered ownership stakes as part of this program.

Yet as the Treasury has readied other programs, it has increasingly turned to creating the special entities. Legal experts said the Treasury's plan to bypass the restrictions may be unlawful.

"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.

Of the two major restrictions imposed by Congress in the bailout legislation, the limit on executive pay has been the most politically explosive issue.

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.

Private meetings
But 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.

In private meetings with officials in both the Bush and Obama administrations, firms' leaders have pushed back against pay limits.

A major test of whether the Treasury would apply the congressional restrictions was a $1 trillion program developed last fall to revive consumer lending. The initiative, known as the Term Asset-Backed Securities Loan Facility, or TALF, will be seeded with up to $100 billion from the financial rescue package, with the rest coming from the Fed.

The program set up a special entity providing low-cost loans to hedge funds and other private investors so they can buy securities that finance consumer debt from banks and other lenders. This would free these companies to make more loans.

When the Bush administration announced the program in November, officials directed the Fed to apply the pay limits to the lenders because they stood to benefit the most from the program. "There was a public hunger for executive-compensation restrictions, and we knew we couldn't be tone-deaf to the politics there," a former Bush administration official said.

In February, Obama administration officials at the White House and the Treasury began reviewing that decision. Treasury officials consulted with Department of Justice attorneys, who said they could legally avoid the pay restrictions, according to a government official. The requirements were removed just before the initiative was launched.

The concerns persisted as the administration crafted other initiatives. Some private investors said, for instance, that they would not help the government buy toxic assets from banks if the congressional restrictions were applied to them. And every major provider of small-business loans has said that it will not participate in the government's program if it has to surrender ownership stakes to the government or submit to executive-pay limits.

[emoji]169[/emoji] 2009 The Washington Post Company

 

[dajoka004]

Yeah. I've been here a minute.

How come whenever I tried to post the article, it broke the Yuku page?

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.

 

[sundoobie]

Interesting read.

http://www.msnbc.msn.com/id/30040084/

What I am

about is the side article...

[h1]Financial industry paid millions to Obama aide[/h1]

Lawrence H. Summers, the top economic adviser to President Obama, earned more than $5 million last year from the hedge fund D. E. Shaw and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money, the White House disclosed Friday in releasing financial information about top officials.

But ironically, in the months since Obama was sworn in as president, the number of lobbyists in Washington has grown. The reason: complex bills like the president's $787-billion stimulus package are like lobbyist catnip to Washington's K Street corridor of influence peddlers.

And with so much money on the line, the Washington Post found that more than 2,000 cities, companies and associations outside Washington have hired, you guessed it, lobbyists.

http://latimesblogs.latim.../03/lobbyists-thriv.html

CHANGE we can believe in .. yah RIGHT!!!

 

[nnarum]

I clicked on the print button below the article and it gives it in a plain text format.

For some odd reason I felt that I've argued about Obama with SunDOOBIE before...

 

[dajoka004]

The number of responses to this is disappointing.

Trillions of dollars are being passed around in very shady ways. Don't let this go unnoticed.

 

[f a y b a n]

Originally Posted by DaJoka004

The number of responses to this is disappointing.

Trillions of dollars are being passed around in very shady ways. Don't let this go unnoticed.

I just don't think everyone takes such a cynical approach to government all the time. Since when have posts like these ever got a largefollowing anyway?

 

[eddie]

Originally Posted by F A Y B A N

Originally Posted by DaJoka004

The number of responses to this is disappointing.

Trillions of dollars are being passed around in very shady ways. Don't let this go unnoticed.

I just don't think everyone takes such a cynical approach to government all the time. Since when have posts like these ever got a large following anyway?

He never said that these post get "large followings", he's saying it needs to and i must agree. If the zeitgeist is true this"bailout" of banks is leading to massive inflation and massive debt. we cannot let this go unnoticed because it is our money be used for all this andthis is simply unacceptable

 

[wstcoastgotti]

dude is quickly becoming a fraud... so all this BS last week about execs givin their money back, now we are going to turn on congress so they get paid???

Gov't is so shady

 

[mr delorean]

Originally Posted by DaJoka004

The number of responses to this is disappointing.

thats because niketalk bought the obama hype hard. now that they see things wont be as they were promised, most will just look the other way andhope it goes away.

 

[superblytrife]

Originally Posted by DaJoka004

The number of responses to this is disappointing.

Trillions of dollars are being passed around in very shady ways. Don't let this go unnoticed.

And oddly enough, that practice has been going on since forever. And it will continue when Obama is out of office, too.

It's politics, homie. It is what it is.

Btw, Obama stans are on the same level as dudes who feel the need to be overly critical of Obama the politician. Bothannoying as @++$.

 

[i dont pass]

Politics as usual....

 

[executive76]

Originally Posted by superblyTRIFE

Originally Posted by DaJoka004

The number of responses to this is disappointing.

Trillions of dollars are being passed around in very shady ways. Don't let this go unnoticed.

And oddly enough, that practice has been going on since forever. And it will continue when Obama is out of office, too.

It's politics, homie. It is what it is.

Btw, Obama stans are on the same level as dudes who feel the need to be overly critical of Obama the politician. Both annoying as @++$.

QFT

 

[lilstarz07]

LOL

 

[knightngale]

i think this was going to be obvious ever since he favored the first bail out
it is just friends helping their friends and +#*+%%+ the rest of the country

 

[essential1]

Inside Obama's bank CEOs meeting
By EAMON JAVERS | 4/3/09 2:13 PM EDT

The bankers struggled to make themselves clear to the president of the United States.

Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offeredseveral explanations for paying high salaries to their employees - and, by extension, to themselves.

"These are complicated companies," one CEO said. Offered another: "We're competing for talent on aninternational market."

But President Barack Obama wasn't in a mood to hear them out. He stopped the conversation and offered a blunt reminder ofthe public's reaction to such explanations. "Be careful how you make those statements, gentlemen. The public isn't buying that."

"My administration," the president added, "is the only thing between you and the pitchforks."

The fresh details of the meeting - some never before revealed - come from an account provided to POLITICO by one of the participants. A second source insidethe meeting confirmed the details, and two other sources familiar with the meeting offered additional information.

The accounts demonstrate that despite the public comments on both sides that the meeting was cordial, the tone in the room was in fact one of mutual wariness.The titans of finance - men used to being the most powerful man in almost any room - sized up a new president who made clear in ways big and small that heexpected them to change their ways.

There were signs from the outset that this was a business event, not a social gathering. At each place around the table sat a single glass of water. No ice.For those who finished their glass, no refills were offered. There was no group photograph taken of the CEOs with the president, which typically happens atceremonial White House gatherings but not at serious strategy sessions.

"The only way they could have sent a more Spartan message is if they had served bread along with the water," says a person who attended the meeting."The signal from Obama's body language and demeanor was, 'I'm the president, and you're not.'"

According to the accounts of sources inside the room, President Obama told the CEOs exactly what he expects from them, and pushed back forcefully when theyattempted to defend Wall Street's legendarily high-paying ways.

From the White House, there were five principal attendees: chief of staff Rahm Emanuel, who arrived a few minutes late, Treasury Secretary Timothy Geithner,Council of Economic Advisers chairwoman Christina Romer, senior adviser Valerie Jarrett and director of the National Economic Council Larry Summers.Uncharacteristically, Summers said almost nothing, and it appeared to one participant as if he had been told to remain silent.

To break the ice, JPMorgan Chase CEO Jamie Dimon offered Geithner a fake check for $25 billion, the amount of Troubled Asset Relief Program money that thecompany has accepted. Although many of those in the room laughed, Geithner didn't keep the check.

The president entered the room a few minutes later and made a lap of the table, shaking hands and saying hello to the CEOs, several of whom he called by name.

Taking his seat at the table, the president said, "So let's get to it." He spoke for several minutes without notes, giving an overview of theeconomic situation as he saw it. But the first comment that made an impression on several attendees was on Wall Street salaries and bonuses.

The president spoke of public outrage over the high-flying executive lifestyle. "The anger gentlemen, is real,"Obama said. He urged pay reform and said rewards must be proportional, balanced, and tied to the health and success of the company.

The president described the financial system as still "fragile" and asked for cooperation from the CEOs. But he also told them he wouldn't shyaway from regulatory reform. Obama wrapped up his remarks and threw the conversation open to the table, saying, "So, who'd like to talk?"

JPMorgan's Dimon spoke first. He began by complimenting the president on the economic team he'd assembled. And he said his industry needs to explainmore directly to the American people that the economic recovery plans are already working. Dimon also insisted that he'd like to give the government'sTARP money back as soon as practical, and asked the president to "streamline" that process.

But Obama didn't like that idea - arguing that the system still needs government capital.

The president offered an analogy: "This is like a patient who's on antibiotics," he said. "Maybe the patient starts feeling better after acouple of days, but you don't stop taking the medicine until you've finished the bottle." Returning the money too early, the president arguedcould send a bad signal.

Several CEOs disagreed, arguing instead that returning TARP money was their patriotic duty, that they didn't need it anymore, and that publicitysurrounding the return would send a positive signal of confidence to the markets.

Bank of America CEO Ken Lewis cracked a joke at the expense of his peers who'd lavished praise on the administration: "Mr. President," he said,"I'm not going to suck up to Geithner and Summers like the other CEOs here have." Lewis also urged the president not to paint all the banks withthe same broad brush.

The president argued that's not what the White House was doing. Indeed, earlier the same week, Obama said at a nationally televised news conference,"The rest of us can't afford to demonize every investor or entrepreneur who seeks to make a profit."

As the meeting wound down after nearly an hour and a half, the CEOs hustled out to live television positions on the White House grounds, where many gaveinterviews to CNBC.

It had been a landmark day in the history of American capitalism. Unbeknownst to the financial executives, General Motors CEO Rick Wagoner was also onPennsylvania Avenue that day, meeting with Obama's auto bailout task force. Although the finance CEOs got a meeting with the president, Wagoner saw onlyObama's senior advisor Steven Rattner at the Treasury Department. During the meeting, Rattner demanded Wagoner's resignation.

It had been a tough day for CEOs in the nation's capital.

 

[duba169]

rich people hooking up rich people

nothing more than that.... forget all that conspiracy talk

 

[drob2345]

Originally Posted by mr delorean

Originally Posted by DaJoka004

The number of responses to this is disappointing.

thats because niketalk bought the obama hype hard. now that they see things wont be as they were promised, most will just look the other way and hope it goes away.

Obama is trying to do what Roosevelt did back in the day, he is just trying to keep money in the economy and in order to do that there is a giveand take, u cant just print up more money....he is doing what he promised. Its hard to make everyone happy, i think he is doing what he believes is in thecountry's best interest. They didn't like what Roosevelt did back then but the fact of the matter is it kept the country going...Its the Paradox ofthift, with the economic state the way it is, people start to cut back on their expenditures which takes money out of the economy and intern forces us furtherin to the depression/Recession...

The people acusing Obama of fraud must not have looked into what obama said he was going to do well enough

 

[btk]

Originally Posted by DaJoka004

The number of responses to this is disappointing.

Trillions of dollars are being passed around in very shady ways. Don't let this go unnoticed.

word. Money isn't just evaporating, it's going SOMEWHERE. Many folks are blinded to the truth, they see a black president and think %@@+$ all better.Well guess what people, it's 2009 and it's not about color anymore. Look beyond on the surface. It's about your livelihood, your family's andyour kids livelihoods. CHANGE my $%%. Obama's no better than the rest of em.

 

[dajoka004]

This is not just politics. And NO, we have not seen this before.

This money is going to be paid off by US. That's right, you and me. We're the ones who will be bearing the burden of the trillions of dollars beingpassed out right now. Are you okay with your money going toward banks who leveraged themselves 40:1 and higher? I'm not.

Trillion is the new billion. The sums of money that get thrown around like nothing now are ridiculous.

 

[drob2345]

Originally Posted by BTK

Originally Posted by DaJoka004

The number of responses to this is disappointing.

Trillions of dollars are being passed around in very shady ways. Don't let this go unnoticed.

word. Money isn't just evaporating, it's going SOMEWHERE. Many folks are blinded to the truth, they see a black president and think %@@+$ all better. Well guess what people, it's 2009 and it's not about color anymore. Look beyond on the surface. It's about your livelihood, your family's and your kids livelihoods. CHANGE my $%%. Obama's no better than the rest of them

People did not vote for Obama becuase of his race, they voted fot him they believe in HIM....u are the one talking about race

 

[Betonblck]

I always ask this question when people say that they are disappointed or that this isn't change.

What were you guys expecting?

In one debate, Obama said that one of his advisors was Warren Buffet. Warren Buffet and Charlie Munger run Berkshire Hathaway.

By the way, the article sounds like just speculation on what the "administration believes" and what the "administration will do".

 

[theconditioner]

 

[btk]

Hope + Change = same %#!% different toilet. We need to overthrow the government and start from scratch. Otherwise, we and our future generations will be attheir mercy.

 

[btonnt]

Trillion is the new billion. The sums of money that get thrown around like nothing now are ridiculous.

I agree. and to the point that it's largely meaningless now in my view. What can any of us do about it now? the seeds for this even more preposterousdebt have already been planted and established for the country.

I think what should be most significant in grasping throughout all of this is the illusion of freedom. Now we're just going through the motions oftightening the grips that we've been nationally oblivious to for decades. What can we realistically do about it now? write Congress? villify Obama? protest in the streets? go after these CEOs with pitchforks in hand? just let the economy collapse completely? I'm asking all of this sincerely forthought and possible answers not at all to be contrarian. The defining steps towards our current situation were taken with results ensured well before Obamatook office. Did McCain have a different solution? or any? How much power do we really think any president has? these are after all, as stated,"the CEOs of the most powerful financial institutions in the world"....the individual placed at the highest elected office most definitely has toplay by the rules. I recall a clip of Obama when asked about his thoughts on Bernanke and options towards the future of the economy, where hereplied, "I don't think it's good policy for the president or a president elect to second guess the Fed....(which is an independent body)."...and in discerning from presidential history and instances like a limited Ron Paul campaign I, for one, can see how and why that is true....and if you sitback and look at the semantics of the statement it's a pretty significant and telling one imo. I agree with the others who hold that Obama is trying to dowhat he believes is in the country's best interest. that's just my opinion though...maybe Im just trying my best to be positive or at least not drownin the negative.

good post and both good articles btw.