Major banks that benefited from the $700 billion bailout rescue package submitted records of ownership and executive pay, one of the requirements outlined by Congress in order for Banks to participate in the program.
So the Obama administration decided to engineer its new bailout initiatives so that firms benefiting from the bailout can avoid the Congressional restrictions, including limits placed on executive pay.
The administration has set up entities to act as a kind of middleman, channeling funds to the firms and avoiding the restrictions imposed by Congress.
There are some legal experts who are questioning the legality of this strategy including a former Justice Department Attorney who said:
"They are basically trying to launder the money to avoid
complying with the plain language of the law."
The administration says that this strategy enables them to determine if firms should be subject to the congressional restrictions.
The strategy has attracted little attention on Capitol Hill and some congressional aides have said that they were unaware of the administration's strategy. As you remember folks, two weeks ago Congress was up in arms about the AIG bonuses with some members of Congress accusing the Obama administration of not doing enough to safeguard the taxpayers interests.
Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, believes congressional conditions should apply to any firm benefiting from bailout funds. He plans to review the administration's decisions and may seek to undo them.
"We have to make certain that if they are using government money in any sort of way, there should be restrictions," he said.
According to Treasury spokesman Andrew Williams:
"These programs are designed to both comply with the law and ensure taxpayers' funds are used most effectively to bring about economic recovery."
In one program,to restart small business lending, administration officials plan to set up a middleman called a special purpose vehicle, a term made notorious during the Enron scandal, or some other type of entity to avoid the congressional restrictions, sources familiar with the strategy said.
In another program,to restart consumer lending, a special entity was created for the purpose of getting around legal limits on the Federal Reserve, which is helping fund this initiative. The Fed don't normally support the markets that finance credit cards, auto loans or student loans, but could channel the funds through a middleman.
When the initiative was being developed last year, the Bush administration decided to apply executive pay limits to firms participating in this program. However the Obama administration reversed that decision days before it was unveiled on March 3 and lifted the restrictions, according to sources who spoke on condition of anonymity because the discussions were private.
So,it appears that the Obama administration may be violating the law and very few in Congress either know about it or will do anything about it.
This administartion is running roughshod over the laws and Constitution of this nation and the sheep are just merrily following behind.
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