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>Political Disconnect’s Legal Opinion of President Bush’s Proposal

>The proposed litigation gives Secretary Henry Paulson almost carte blanche authority to do whatever he wants to do to buy up commercial paper of American banks that debtors could not pay for in this Housing crisis.

Without the conditions that the limit of authority is $700 billion and the money is to be used to buy sick mortgages from companies, there are no conditions.

I’m reminded of the term cart blanche. Blanc means blanche, like a white piece of paper given from one person I call the Party of the First Part (Congress and the President) to another called Party of the Second Part.

Carte blanche authority means you have just signed your life over to me to do with it what I please. The white paper has nothing on it but a signature at the bottom for the party of the second part (Hank Paulson) to do with it whatever he feels appropriate, to “superscribe what other conditions he pleases.” Hence, except for the two conditions set down by the president about the subject matter and the amount, it is almost unconditional in terms, unlimited in authority.

Of course, that’s just the beginning. Congress will make sure their oversight ability is not destroyed–so that if something goes haywire they can shout and squeal bloody murder that the Republican Administration has raped us. That, they will do, with or without further conditions. The New York Times is already blaming President Bush for the entire mess, anyway. Despite the fact that a big part of the mess is the loose and easy money policy of the preceding administration. If you want to go to the genesis of the problem, name Robert Rubin, Clinton’s Secretary of Treasury–and also Alan Greenspan–for printing up so much new money every time we had a shock wave in the markets. Blame Barney Frank and Charlie Rangle and their ilk for screaming racial discrimination so loud in the halls of congress that the Democrats got that august group to approve less rigid requirements to buy a house so that even the poorest of the poor in Harlem, Rangle’s bailiwick, could “afford” to buy a house.

Well, as the pendulum falls, we see that wasn’t a good idea at all. It’s those very people–not all of them black–that caused this mess. The mortgage loan fall was first enabled by an “easy money dollar printing scheme of Robert Rubin and Alan Greenspan, then by a Congress that wanted to look good before voters and patronize them for votes. It was President Herbert Hoover in 1928 who called for “a chicken in every pot.” But Democrats had to go one better. “Let’s extend this from a chicken to something much bigger–all on the public largesse,” they said–that is, “to house ownership despite the fact they don’t qualify for loans.” But home ownership buys a lot more votes than a chicken in a pot, so they sponsored bills that loosened bank rules and they got President Bush to go along. Little did any of them realize–or maybe they did and didn’t care–that this tomfoolery would come back and bite the rest of the American taxpayers who could afford a house and who have never defaulted on their loans. Frankly, none of them were thinking about the honest, mortgage-paying taxpayer. They never do. We own America and our lawmakers, our public servants, treat us like dirt. It is time to send all lawmakers back home and start out fresh.

Here’s the deal breaker. As mentioned in Bush’s section 4 and 5 the Secretary of the Treasury will be the only one authorized to supervise this mess and to purchase the mortgage-related issues and issue obligations. Congress, keep your greedy hands off. Congress will never give up their oversight of this, and that will be a real deal breaker, or at least an obstacle that will prevent speedy passage of the bill. Without speedy work on the part of Congress, more banks will go under, and more financial damage will be done in America, making it all-the-more expensive for us the taxpayers.

The only limitations on “financial institutions” who are eligible to play this payoff game is that banks must be domiciled in America. The law would designate these institutions as “agents of the Government.”

CALLING ALL DEMOCRATS: For once in your lives can you put details and petty turf squabbling and quarreling aside and pass something to benefit all Americans. And pass it right now?

It doesn’t take a genius to figure out what Bush is proposing. The White House wants to solve a problem potentially as big as the 1929 stock market crash and the depression. Speed is of essence. He and his people, together with the Fed, worked very expeditiously. Now it’s the turn of Congress! The American people demand and expect no less.