Bush to Taxpayers: “I don’t need no stinking law to spend your money.”
This is all I am going to write about the rescue packages for GM and Chrysler (for the UAW and Cerberus actually) until these companies either file for bankruptcy (which is what should happen) or until they come back for more (which is what will happen). Mr. ToughMoneyLove is quite upset about the lawless actions of our government.
Treasury Secretary Paulson finally found some eager to please and therefore negligent government lawyer to tell him that he and President Bush had the legal authority to send billions in TARP funds to GM and Chrysler.
The TARP funds were authorized by Congress under the Emergency Economic Stabilization Act of 2008. The Executive Branch (Paulson/Bush) received the following spending authority under the TARP program:
The Secretary is authorized to establish the Troubled Asset Relief Program (or “TARP”) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.
The Act defines a “financial institution” this way:
The term ‘‘financial institution’’ means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.
Finally, here is how Congress defined “troubled assets”:
Rresidential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages that in each case were originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and
any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
Once again I ask, which of GM and Chrysler is a “financial institution” and where are the “troubled assets”?
This is what Paulson told Congress on November 18, 2008 at a hearing of the House Financial Services Committee:
And so in your mind, since you are essentially in charge of disbursing the funds, can you give me a clearer, black-and-white definition of what a financial institution is?” Hensarling asked Paulson.
“Congressman, I can’t,” Paulson responded. “We have a broad definition, we got very broad authorities and powers [from Congress], and I think that’s appropriate. But we certainly are not going to give money to plumbing contractors, and we’re not going to give money to a lot of other people and institutions that are applying.”
Paulson said he feels a “great responsibility to stick with” the purpose of the TARP, which is “stabilizing and strengthening our financial system,” he said. “And I’ve said to you very clearly that I believe the auto companies fall outside that purpose.”
Paulson insists that TARP funds are aimed exclusively at the financial system. “That’s what the purpose is,” he said.
This was an important statement by Paulson because the agencies charged by Congress with implementing the laws it passes are deemed by the Courts to have broad discretion in interpreting those legal directives. Paulson is the head of this particular agency, the Department of the Treasury. Yet one month after making this unequivocal statement that TARP funds are not to be used for car companies, Paulson is sending them billions in TARP funds.
Can it be any clearer that our Executive Branch has no moral or legal compass whatsoever when it comes to spending our money?
I’m not letting Congress off the hook on this either. Remember that silly thing called the U.S. Constitution? Here is a little nugget of wisdom from Article 1, Section 8:
No Money shall be drawn from the Treasury, but in Consequence of Appropriations
made by Law; and a regular Statement and Account of the Receipts and
Expenditures of all public Money shall be published from time to time.
The U.S. Treasury has no authority to decide for itself how our money is spent. So tell me Congresspeople, what day was it exactly when you appropriated billions for GM and Chrysler?
So why isn’t Congress screaming bloody murder about this? Mr. ToughMoneyLove will tell you why. This unilateral decision by Paulson and Bush provides perfect cover for members of Congress. If GM and Chrysler fail (as I expect), costing the taxpayers of billions, each Congressperson can say “It’s not my fault. I never voted to give money to car companies. TARP funds were to be used for banks. That’s what Paulson told us to our faces on November 18.”
And if somehow GM and Chrysler have a dramatic turnaround, each Congressperson can boast of aiding that turnaround by virtue of the wonderful TARP program they passed.
In short, Congress is in a perfect place on this, fully prepared to deflect blame or take credit as dictated by the rescue outcome.
Now for the good economic and political news …… sorry I couldn’t find any except for the Carnivals that Mr. ToughMoneyLove appeared in this week:
Carnival of Debt Reduction #170 hosted by Gather Little by Little.
Carnival of Personal Finance #183 hosted by the Frugal Duchess.
Money Hacks Carnival #43 hosted by Liberta.