Administration decides to protect financial institutions from Congressional mandates

[TayTay]

per the http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040303910.html?hpid=topnews">Washington Post article today, the Obama Administration has decided to help financial institutions skirt laws it doesn't like.

Administration Seeks an Out On Bailout Rules for Firms
Officials Worry Constraints Set by Congress Deter Participation

By Amit R. Paley and David Cho
Washington Post Staff Writers
Saturday, 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.

What is the point of having 3 co-equal branches of government if the branch charged with executing the law is disregarding the law? I understand that Larry Summers and Timothy Giethner are trying to help their friends at Wall St do as little change as possible to the financial system, but this is outrageous and an abuse of power.

Congress can submit all the proposals it wants to restrict executive pay, prevent the public funds from going to excessive parties and compensation and so forth and the Admin can just ignore the due process of law. What's next? The Executive branch declares Congress a "potted plant" and decides to completely disregard it? I expected better from this Admin and I hope they reconsider these moves.

[Mass]

1. My husband was telling me yesterday this administration is behaving has if they were blackmailed by

the financial industry. He thinks that there is no institutional memory of what has been done in the financial industry, except in the mind of a very few and that this explains why this administration has been so lenient with these people. Between measures like that and the fact that these Treasury Department seats are still not filled, I am starting to wonder whether it is simply that people like Geithner and Summers only understand the bank executives pov or whether there is more.

But I have to say I am starting to become disappointed by some of these measures. Add to that that there are way too many " moderates" in the Senate. I am still smarting that this budget has a measure to lower inheritance taxes between 1 and 5 millions dollars (passed with Democratic votes, some of them not moderates), but could not find enough votes by far to deal with usury laws. These are the types of votes which make me doubt of these people understanding of the situation.

http://senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=1&vote=00146

http://senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=1&vote=00140

[karynnj]

3. Those two votes are extremely troubling

I really can't believe so few voted for the usury one. One major appointment's on both was Tester. He really did sound like a populist - and his votes here are awful. I think voting the opposite way on each could easily be explained in Montana.

[wisteria]

2. It makes you wonder who really holds the true power in this country.

This development saddens me.

[karynnj]

4. This is troubling on two counts

1) We just had an administration that was defined by wanting a "unitary President". This does indicate that they will ignore Congress's jurisdiction. This was wrong when it was Bush and wrong now. I didn't expect that Obama would act this way and hope that this is the WP's take and reality is more sane.

2) Obama understands that there is great anger against the bankers - he is quoted as telling them that only his administration stands between them and the pitchforks. That is hyperbole, but there is much truth to the description of the amount of anger. It is in neither Obama's or the bankers' interests to have people see the administration closely aligned with the bankers - that would change the picture and the administration will not be seen as "between" the people and the bankers, but with them.

[globalvillage]

5. Troubling if true.

I don't know. This piece seems to be a little light on sourcing and heavy on unnamed officials. I'd like a bit more context around the single Treasury quote amidst all the 'some say'.

Someone needs to ask Obama and Treasury. I'm going to wait to see how this plays out. Until I hear something solid, I'm going to remain a bit suspect.