September 29, 2008

Hank Paulson’s Resignation Should Be a Bailout Precondition

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 7:54 am

Paulson can assert that he can be independent in fact all day long, but his lack of independence in appearance, and attitude, is obvious.

Many of the provisions in what Paulson originally proposed betray his lack of true independence.

His original “solution” involved him becoming the country’s virtual chairman of the board. There may still be probably is too much power concentration even in the current bailout bill.

Not to mention the possibility that Paulson, perhaps with the help of Ben Bernanke, may have blackmailed Congress into acting — which, if true, is grounds for doing more than merely forcing his resignation.

Newt Gingrich:

Gingrich even expressed concern with Paulson’s connections to Wall Street.  The treasury secretary served as the chairman of a major global investment banking and securities firm before joining the Bush administration.

“You have the former Chairman of Goldman Sachs asking for 700 billion dollars, and in his initial request, asking for it in such an un-American way that I think he should have resigned,” said Gingrich. “I think Paulson has terminally misunderstood the nature of the American system. Not just no review, no judicial review, no congressional accountability. Give me 700 billion dollars, 700 BILLION dollars! ‘I’ll be glad to spend it for you.’  That’s a centralization of power that is totally un-American.”

“Even expressed?” Zheesh, ABC, those connections form the heart of the problem.

Paulson will never be able to make a convincing case that valuation decisions involving investments originally made by people he used to either work with, manage, or hang around were made fairly and impartially. Despite the presumption that “of course” he’s leaving on January 20 of last year, I believe that he intends to convince the next president that he’s “indispensable” and needs to stay.

The bailout in any form shouldn’t pass unless Paulson leaves.

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UPDATE: Here’s the link to Michelle Malkin’s post containing the bailout bill as of sometime yesterday afternoon.

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10 Comments

  1. So what are the details of the bailout, any links???

    I posted on NB, there are 3 non negotiable points in which I would not support a bail out of any kind:

    1. Repeal the Community Re-investment Act (1977), anti-Redlining legislation and all of its subsequent modifying acts to embellish those laws.

    2. NO taxpayer funds will be used to stop property foreclosers.

    3. NO taxpayer funds will be used to stop defaults on student loans, credit cards and auto loans.

    If you really want show legitimacy, then force the immediate resignations from office of Dodd and Frank for the part they played in refusing to reform the system in 2005 to head off the crisis. There must be accountability, heads must roll.

    Comment by dscott — September 29, 2008 @ 9:09 am

  2. Why is his resignation a condition for the bailout; I say to hell with the bailout and he goes anyway.

    The time has come for the 50 States to wake up to the madness going on in Congress and Washington, and they must call for a Constitutional Convention under Article V of the US Constitution and fix this sinking ship.

    The State must realize these clowns in Washington are sending us down the toilet and strapping a massive tax debt upon the US Taxpayers that will cripple generations of this country. And be assured with the $29 billion gone to Bear Stearns, $85 billion to AIG, $300 to Fannie and Freddie, do you really think $700 billion will solve this crisis? Hell no, Paulson has already said this is no guarantee it will fix the problem.

    The time has come for 50 states to wake up before it’s too late; we need a Constitutional Convention.

    Comment by Brian — September 29, 2008 @ 9:48 am

  3. Tom,

    I understand that you are against the bailout and I won’t attempt to defend Paulson’s heavy handed effort. I won’t cry if Paulson is sent packing. However, I echo DScott in asking for some congressional heads to roll. Several years ago regulators went before congress asking for greater oversight of Fannie Mae and treated like crap and darn near called racist by morons like Maxine Waters, Meaks, and others of their ilk. They defended Franklin Raines while he stupidly said there was zero risk. In addition to congressional heads rolling, I want some CEO’s, CFO’s, etc to face charges for fraudulently obtaining bonuses. This problem didn’t just happen – people caused it and they should be held accountable.

    Back to the bailout, I am also reflexively opposed to bailouts. However, I recognize the danger the system is in. I have to ask do you think the Depression could have been avoided or significantly lessened in scope if Hoover had taken immediate action to reassure people that their bank deposits were safe. I’m not an expert on the Depression, but believe the bank runs greatly exacerbated the problems by tightening credit and causing the economy to grind to a halt. I guess what I’m saying is the potential negatives of doing nothing outweigh the potential negative of taking action that I’d normally oppose.

    Comment by largebill — September 29, 2008 @ 9:49 am

  4. #1, see update.

    #2, Sorry on delay in seeing your comment. I haven’t bought in yet, but I can’t see buying in to even the “perfect” plan (as if one could exist) if Paulson is around.

    #3, I think the bailout can conceivably be put together acceptably, but I haven’t seen it done that way yet.

    That’s on the assumption that the perils of not acting are real, and not contrived. And regardless of what’s being done, it will almost surely be unconstitutional on its face.

    In former days, heads would roll at election time, even if it’s your guy’s party. These Dems are in such safe seats that it’s not going to happen, and thus impeachments should be happening, but they won’t. Instead they’re salivating at having ever greater control over the country and its economy.

    As you can tell (/obviousness), I’m very disgusted by this whole spectacle.

    Comment by TBlumer — September 29, 2008 @ 10:11 am

  5. Tom:

    You hit it right on the head, they see the power they are going to get with this move, screw the people. That’s why there is no longer a 4th Amendment; they love their power.

    Bill:

    Ben Bernanke is an economic scholar from Princeton who wrote extensively on the Depression and concluded it was the unconstitutional Federal Reserve that caused the Depression, and socialist legislation from Roosevelt that furthered it. There is a large amount of information on the web detailing this, especially from Bernanke.

    Crazy isn’t it, we are heading toward financial perils and the man that knows more about US depressions is guiding the ship. I think they call that irony?

    Comment by Brian — September 29, 2008 @ 10:27 am

  6. Brian, I think they call it mental illness…

    Comment by Stephen — September 29, 2008 @ 10:28 am

  7. Section 109. Foreclosure Mitigation Efforts.

    For mortgages and mortgage-backed securities acquired through TARP, the Secretary must implement a plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs. Allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Requires the Secretary to coordinate with other federal entities that hold troubled assets in order to identify opportunities to modify loans, considering net present value to the taxpayer.

    Section 110. Assistance to Homeowners.

    Requires federal entities that hold mortgages and mortgage-backed securities, including the Federal Housing Finance Agency, the FDIC, and the Federal Reserve to develop plans to minimize foreclosures. Requires federal entities to work with servicers to encourage loan modifications, considering net present value to the taxpayer.

    NO! and H#$%#$ NO!!!!! TARP is a cover up! It does not repeal CRA, the House Repubs should declare this DOA.

    Comment by dscott — September 29, 2008 @ 11:24 am

  8. The more I think about implications the angier I get. What we are talking here is actually writing down the prinicpal on loans! NO WAY that is acceptable under any circumstances since what is being proposed is REWARD bad behavior with absolutely no disincentive to stop this in the future. BTW. look at the last section on taxing debit forgiveness, not only does a borrower get to write down the principal, they also get not to report it as income. TAX FREE INCOME, from bad behavior. Now tell me crime doesn’t pay. OUTRAGEOUS!!!!!!

    Comment by dscott — September 29, 2008 @ 11:42 am

  9. “Shana, they elected these Democrats and RINOs, they knew what they were getting into. I say, let it crash.”

    Comment by Joe C. — September 29, 2008 @ 11:47 am

  10. Apparently the $700 billion figure was pulled out of the air. Near the end of the piece, the punch line. http://latimesblogs.latimes.com/washington/2008/09/bailout-plan.html I’m not sure how reliable that story is.

    Comment by dscott — September 29, 2008 @ 1:48 pm

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