Wednesday, March 25, 2009

What Constitution?

Fox News Fox 'n Friends discussion this morning focused ever so briefly on the question of a Constitutional foundation for the actions of handing over billions in rescue/recovery monies from the Treasury of the United States. And the Treasury Secretary requesting and getting even broader powers than currently had.

The trio showed a clip of a portion of the Financial Services Committee hearing

"Where is the Constitutional Authority in the Constitution of the United States?"
Congresswoman Michele Bachman asked Federal Reserve Chairman Ben Bernacke and Treasury Secretary Timothy Geitner during the Tuesday Financial Services Committee hearing on AIG and bank rescue plan.

Geitner answered in a generality... the authority comes from this body.

Bachman pressed repeating her question.

Geitner said the authorization comes from action this body has taken.

He still could not actually cite where the Constitution itself enables the powers.

It's all pretty clear, without the spin.

Update: U.S.Constitution Powers

Article 1 Section 8
Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and current coin of the United States;

To establish post offices and post roads;

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

To constitute tribunals inferior to the Supreme Court;

To define and punish piracies and felonies committed on the high seas, and offenses against the law of nations;

To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water;

To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years;

To provide and maintain a navy;

To make rules for the government and regulation of the land and naval forces;

To provide for calling forth the militia to execute the laws of the union, suppress insurrections and repel invasions;

To provide for organizing, arming, and disciplining, the militia, and for governing such part of them as may be employed in the service of the United States, reserving to the states respectively, the appointment of the officers, and the authority of training the militia according to the discipline prescribed by Congress;

To exercise exclusive legislation in all cases whatsoever, over such District (not exceeding ten miles square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States, and to exercise like authority over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings;--And

To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

Net the Truth Online

U.S. Seeks Expanded Power in Seizing Firms
Published: March 24, 2009
WASHINGTON — The Obama administration and the Federal Reserve, still smarting from the political furor over the bailout of American International Group, began a full-court press on Tuesday to expand the federal government’s power to seize control of troubled financial institutions deemed too big to fail.

In his news conference on Tuesday night, President Obama said the government could have handled the A.I.G. bailout much more effectively if it had had the same power to seize large financial companies as it did to take over failed banks.

“It is precisely because of the lack of this authority that the A.I.G. situation has gotten worse,” Mr. Obama said, predicting that “there is going to be strong support from the American people and from Congress to provide that authority.”

Earlier on Tuesday, the Treasury secretary, Timothy F. Geithner, offered a proposal that would allow the government to take control, restructure and possibly close any kind of financial institution that was in trouble and big enough to destabilize the broader financial system.

The federal government has long had the power to take over and close banks and other deposit-taking institutions whose deposits are insured by the government and subject to detailed regulation.

But the Obama administration and the Fed would extend that authority to insurance companies like A.I.G., investment banks, hedge funds, private equity firms and any other kind of financial institution considered “systemically” important. That would let the government for the first time take control of private equity firms like Carlyle or industrial finance giants like GE Capital should they falter.

The Treasury and the Fed each sent their own proposals to the House Financial Services Committee on Tuesday, and President Obama has asked Congressional leaders to put the legislation on a fast track.

Geithner Campaigns for Broader Control of Financial Firms By ANAHAD O’CONNOR Published: March 25, 2009

Treasury Secretary Timothy F. Geithner on Wednesday pressed the case for expanding the government’s ability to take over and restructure ailing institutions that threaten to the broader financial system.

Speaking in Midtown Manhattan to the Council on Foreign Relations, Mr. Geithner said that the government needed the expanded powers in order “to help ensure that this country is never again confronted with the untenable choice between meltdown and massive taxpayer bailouts.”

“One of the key lessons of the current crisis is that destabilizing dangers can come from financial institutions besides banks,” Mr. Geithner said in his remarks, “but our current regulatory system provides few ways to deal with these risks.”

On Tuesday, Mr. Geithner, testifying before the House Financial Services Committee, proposed expanding the government’s power to give it more control over financial institutions, like insurance companies, that are in trouble and big enough to destabilize the broader financial system.

With such authority, the administration argued, rather than having to spend $170 billion to bailout the American International Group, the government could have put the insurance company into receivership or conservatorship and regulators would have been able to unwind it slowly.

Atop A.I.G. insurance companies “is an almost entirely unregulated business unit that took extraordinary risks to generate extraordinary profits,” Mr. Geithner said Wednesday. “And when this unit’s derivative contract losses pushed A.I.G. to the brink of failure last fall, the entire financial system was endangered.”

“The legislation that I believe we need would help us deal with a similar case in the future,” he said.

The proposal would extend power the government has long had over banks to insurance companies like A.I.G., investment banks, hedge funds, private equity firms and any other kind of financial institution considered “systemically” important. That would let the government for the first time take control of private equity firms like Carlyle or industrial finance giants like GE Capital should they falter.

If Congress approves such a measure, it would represent one of the biggest permanent expansions of federal regulatory power in decades. But scores of questions remained about how the authority would actually work,

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