US Treasury Secretary Hank Paulson Three Page Memo to Congress – Drafting Original TARP Plan

By popular demand, we wish to provide our readership the fond memory of former Treasury Secretary Hank Paulson, who have led us down the road of mass taxpayer money infused into failed American businesses.

But testifying before Congress is not new to Hank Paulson prior to September 2008 when the US financial meltdown had occurred.  Back in 2000, Hank Paulson was the CEO of Goldman Sachs and often influenced the regulatory decisions that Congress were to make.  Goldman Sachs ultimately received nearly $14 billion of taxpayer funds that was pumped into AIG for the purpose of keeping the US financial system intact.  Conflict of interest anybody?  In addition, since Goldman Sachs received TARP funding, couldn’t Congress have negotiated how much Goldman Sachs received at something less than face value of the Credit Default Swaps?  Because, if AIG was put into bankruptcy, Goldman Sachs would have received very little of the $14 billion from AIG.

Now to be fair to Congress and its oversight accountability, there were many questions asked and the desire for better understanding of what they were getting US taxpayers into.  But we all know how bureaucracy works in this country.

From the New York Times:

September 21, 2008

Text of Draft Proposal for Bailout Plan

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.–The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.–The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.–The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.–The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

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

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.–The term “Secretary” means the Secretary of the Treasury.

(3) United States.–The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

Here’s are videos of the testimony and the afterward public opinion.

US Treasury Secretary Urging Bailout of US Financial Institution

BBC Surveys Public Opinion

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AIG Versus Its Owners – the American Taxpayer

Clearly AIG’s CEO, Board of Directors and its senior executives have no concept of reality.  The company is 80% owned by the US taxpayers and AIG runs like it’s their private golf club and spa.

Let’s tally up the facts.
AIG
  • Former AIG CEO MauriceGreenberg spends $20 million of AIG money on US Chambers to lobby Congress for deregulation post Enron and turns AIG into an international hedge fund according to American Association for Justice case study.
  • In 2008, over $112,000 of campaign contributionwas given to the Obama Presidential campaign by AIG employees according to OpenSecrets.org
  • In 2008, over $73,000 of campaign contribution was given to Chris Dodd’s campaign by AIG employees according to OpenSecrets.org
  • In 2008, over $44,000 of campaign contribution was given to Hillary Clinton’s campaign by AIG employees according to OpenSecrets.org
  • Federal Reserve Bank in September of 2008 under Bernanke lends insolvent AIG $85 billion with White House and Treasury Secretary Paulson support.
  • AIG has access to various other lending facility including $40 billion of TARP that brings the total to $165-175 billion as of March 2009
  • In March 2009, Bernanke admits being frustrated by AIG problems as AIG reports $62 billion loss in most recent quarter of operations and over $100 billion in 2008 making it the worst lost in US Corporate history.
  • AIG reveals $12.9 billion was paid to Goldman Sachs using Federal taxpayer money due to CDS obligations. Former Treasury Secretary Hank Paulson was the former CEO of Goldman Sachs.
  • Bonus of $165 million is to be paid to AIG executives making 73 of its employees (past or present) of the business division responsible for massive financial losses instant millionaires. A total of $450 million is to be paid to various employees (past or present) for 2008 performance despite the company lack of financial viability.

Average Taxpaying American
  • US job loss in 2008 is net 2.6 million
  • US job loss in 2009 at 22,135 per day or 1.3 million as of end of Feb.
  • Foreclosures nationwide are at all time high according to Sacramento, Calif.-based Foreclosures.com. The company said 121,756 foreclosures were completed nationwide in Feb ‘09, up from 72,694 in Jan and the previous high of 104,243 in Sep ‘08
  • U.S. household wealth falls $11.2 trillion in 2008 according to Federal Reserve data.
  • U.S. income is about $39,000 per capita in 2007

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