This Is the TARP That Never Ends…

 

It was a tall order last fall when then-Treasury Secretary Hank Paulson Jr. asked Congress for $700 billion and nearly unilateral power over how to spend it. With the nation on the precipice of economic Armageddon, Paulson’s request was granted. But now, as financial reform legislation makes its way through Congress, some lawmakers are worried that Paulson’s replacment, Timothy Geithner, may be attempting another Paulson-like power play.

Currently circulating on Capitol Hill is a draft of the House financial services committee’s “Financial Stability Improvement Act,” a wide-ranging effort to rein in too-big-to-fail institutions and bolster oversight of the financial-services industry. The legislation, spearheaded by Rep. Barney Frank (D-Mass.), the committee’s chairman, and Secretary Geithner, who helped to craft the bill, would also create an oversight council staffed by government financial regulators, and would abolish the Office of Thrift Supervision, an agency faulted for its flimsy regulation before the crisis. (The Wall Street Journal has a good run-down of the legislation here.)

The legislation is meeting stiff oppostion, though, from members of both parties. What has lawmakers like Rep. Brad Sherman (D-Calif.) and Rep. Spencer Bachus (R-Alab.) riled up is a provision in the bill they say gives the White House and Treasury unchecked authority to spend taxpayer money, without Congressional approval, to bail out any too-big-to-fail bank that’s poised to topple the economy. Sherman calls the provision “TARP on steroids,” writing in The Hill:

Geithner’s proposal reminds me of the Troubled Asset Relief Program (TARP), the $700 billion Wall Street bailout adopted last year, but the TARP was limited to two years, and to a maximum of $700 billion. Section 1204 is unlimited in dollar amount and is a permanent grant of power to the executive branch. TARP contained some limits on executive compensation and an array of special oversight authorities. Section 1204 contains absolutely no limits on executive compensation and no special oversight.

Disconcerting, indeed. The economy reached the point of near collapse, in large part, due to a gross absence of oversight. And the TARP as well has been marred by a lack of transparency and oversight: As bailout watchdogs have consistently pointed out, we still know very little about how TARP money was spent by institutions that received billions in bailout cash. With that in mind, do we want financial regulation that institutionalizes this opacity?

 

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

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