- Prison Planet.com - http://www.prisonplanet.com -

Congressman Sherman: Geithner’s Proposal is ‘TARP on Steroids’

Posted By admin On September 26, 2009 @ 5:29 am In Money Watch | Comments Disabled

George Washington Blog [1]
Saturday, September 26, 2009

Paul Volcker and senior Harvard economist Jeffrey Miron both testified [2] to Congress this week that the government is trying to make bailouts for the giant banks permanent.

Writing Wednesday in The Hill , Congressman Brad Sherman pointed out [3] that :

In my opinion, Geithner’s proposal is “TARP on steroids.” Section 1204 of the proposal [the proposal being the "Resolution Authority for Large, Interconnected Financial Companies Act of 2009"] allows the executive branch to use taxpayer money to make loans to, or invest in, the largest financial institutions to avoid a systemic risk to the economy.

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.
When I asked Geithner whether he would accept a $1 trillion limit on the new bailout authority (if the executive branch wanted to spend more, it would have to come back to Congress), he rejected a $1 trillion limit, insisting that the executive branch be able to respond without coming back to Congress.

(ARTICLE CONTINUES BELOW)

Congressman Sherman: Geithner’s Proposal is TARP on Steroids 230909banner1 [4]

Both TARP and the Treasury proposal have vague provisions under which taxpayers might possibly recover any money lost through a special tax on the financial services industry. Under the Treasury proposal, only the very largest institutions could benefit from a bailout, but the special tax, if ever collected, would fall chiefly on medium-sized institutions.

Thus, the medium-sized institutions will be at a competitive disadvantage for two reasons. First, the largest institutions will be able to borrow money more cheaply because their creditors will believe that if the institution is unable to pay, the taxpayers will. Second, if there ever is a bailout benefitting a very large financial institution, the tax will be imposed on the medium-sized institutions.

Sherman is a senior member of the House Financial Services Committee and a certified public accountant, so he has a good nose for analyzing proposed financial regulations. Sherman was the first Congress member [5] to question the legality of the Treasury’s plan to recycle the TARP bailout dollars, which could hypothetically push the amount of TARP funds disbursed above the $700 billion maximum set by Congress.


Article printed from Prison Planet.com: http://www.prisonplanet.com

URL to article: http://www.prisonplanet.com/congressman-sherman-geithner%e2%80%99s-proposal-is-tarp-on-steroids.html

URLs in this post:

[1] George Washington Blog: http://www.washingtonsblog.com/2009/09/congressman-sherman-geithners-proposal.html

[2] testified: http://www.washingtonsblog.com/2009/09/senior-harvard-and-cato-economist.html

[3] pointed out: http://thehill.com/special-reports/finance-sept-2009/60067-geithner-rejects-1-trillion-limit-on-bailout-power

[4] Image: http://www.efoodsdirect.com/gmoPeople.html?aid=14&adid=12

[5] first Congress member: http://www.washingtonsblog.com/2009/05/senator-reid-explicitly-endorses.html

[6] Government Is Trying to Make Bailouts for the Giant Banks PERMANENT: http://www.prisonplanet.com/government-is-trying-to-make-bailouts-for-the-giant-banks-permanent.html

[7] Video Explanation Of How The ESM Is Europe’s Uber-TARP On Steroids: http://www.prisonplanet.com/video-explanation-of-how-the-esm-is-europes-uber-tarp-on-steroids.html

[8] Geithner Said to Be Seeking TARP Extension Until Next October: http://www.prisonplanet.com/geithner-said-to-be-seeking-tarp-extension-until-next-october.html

[9] Euro Tarp – Why It Will Be A Screaming Failure: http://www.prisonplanet.com/euro-tarp-why-it-will-be-a-screaming-failure.html

[10] Geithner: Bailouts cost less than 1 percent of US gross domestic product: http://www.prisonplanet.com/geithner-bailouts-cost-less-than-1-percent-of-us-gross-domestic-product.html

Copyright © 2013 PrisonPlanet.com. All rights reserved.