Bailout Plan Loopholes - The Devil is in the Details

Henry Paulson's original 3-page bailout plan (including absolute discretion with no review by congress or the courts) swelled to a hundred and ten pages in order to entice hesitant congressmen to jump onboard and save the sinking ship. But there is one line in particular that has me troubled, and I've not seen any real discussion on it.

In the original 3 page bailout plan (The entire text can be found here: http://www.angrybroker.com/bailout.html ), Section 6 consists of only one sentence. I read and re-read that sentence in an attempt to determine what was really being said. Now I'll admit that I've developed a healthy mistrust of Government and Financial Industry shenanigans over the years, so I may be making too much of this.

Here it is: "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."

Now, here's the thing. When it comes to law, words are supposed to mean what they say. Unfortunately, words often have unique definitions in law, and seemingly innocuous words may be added that will dramatically change the function of a law. The more ways there are to 'interpret' a law, the more ways there are to take advantage of your own interpretation.

If the intent of this section is to limit the TOTAL amount of the "bailout" to $700 million... ooops, I mean BILLION (I forgot how huge this thing is for a second there), why wouldn't this section merely say that and only that?

Why wouldn't it say:

"The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to a total of $700,000,000,000."

But it doesn't say that. It says the authority to purchase is "...limited to $700 billion outstanding at any one time." Now, what does that mean? Does that mean that the total purchased is limited to $700 billion? It doesn't really say that, it says the Secretary's "authority to purchase...shall be limited to $700 billion outstanding at any one time." (The bill that passed has similar language in Section 115, although the funding is graduated - $250 billion right away, then get a note from W to increase it to $350 billion, then with another note from W, the full $700 billion will be available).

Here's the transformation from potential loophole to actual loophole: Say Mr. Paulson hires a big staff and decides which worthless paper to buy. He gets a couple notes from W and spends $700 billion dollars on a load of garbage over the next 3 months. Then, over the next month or so, he sells off half of the garbage, at a loss, to "private sector participants", which is encouraged in Section 113. Then the Treasury only has $350 billion outstanding at that time, get it? He can now go spend ANOTHER $350 billion without any additional approval! So, suddenly, the $700 billion became over a trillion dollars because of the "at any one time" wording. Very sneaky.

If this isn't the intention, then why not say "...a total of $700,000,000." and end the provision there? Maybe because that would make too much sense and tie too many hands.

Keep your eyes on this one, folks. Especially when you finally hear about all the other little "goodies" that were salt-porked into the bill. Goodies like giving the IRS the ability to run extended "sting" operations, using taxpayer money, and the ability to pass out your personal information to state and local police, just as long as they say "terrorist" in the same sentence with your name. Remember - Thomas Jefferson, along with each and every one of our founding fathers, would be considered "terrorists" under today's definitions.

A little rhetoric can go a long way toward oppression and control.

Article Source: http://www.rightbiz.com

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