Back in February, I wrote that the way the Obama Administration keeps changing the rules of the bailout deal is like working with the mafia. Like Boortz said today:
Essentially it’s a “you take my money and I own you” deal.
The problem is that the Democrats keep acting in a mafia-esque manner and the banks are balking at the idea of Barry Obama acting as Chairman of the Board.
On March 11, the New York Times wrote:
Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens.
As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.
The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.
Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo.
Then on the 31st, Paul Kiel at ProPublica wrote:
Since October, more than $300 billion has flowed from the Treasury Department to more than 500 banks, AIG and the auto companies [2]. Now some of it is starting to come back.
Today, four banks announced that they have reimbursed Treasury’s investments. Louisiana’s IberiaBank returned $90 million [3], Signature Bank of New York returned $120 million [4], Indiana’s Old National Bancorp returned $100 million [5], and California’s Bank of Marin returned $28 million [6] today.
As we noted [7] in back in February when IberiaBank became the first to announce it planned to return the money [8], bank CEOs have generally been pretty vague about their reasons for backing out. They don’t like being lumped together with the country’s troubled large institutions just because they took Treasury money, and they certainly don’t like being treated like they needed a bailout, they say [9].
Not one had specifically mentioned the new executive compensation limits [10] — until today. In a statement [4], Signature Bank’s CEO said the limits added by Congress as part of the stimulus bill in February had been a deal breaker.
These banks were returning money before Rep. Barney Frank introduced and the House passed the Pay for Performance Act of 2009. This bill gives the federal government the power to dictate the salary for everyone in a company that takes bailout money. EVERYONE.
So now the Obama Administration, who wants control of the banking industry, is faced with banks backing out of the bailouts because the Democrats are taking to big a bite. What to do?
Boortz explains:
Sources indicate that Obama can get around the rules by not providing direct aid to financial companies. What you do here is set up some special entity that will act as a middleman. The government pays the middleman, and the middleman then sends the money off to the financial institution. Since the financial institution isn’t getting bailout money “from the government” the Barney restrictions don’t apply.
Is this legal? Heck, that doesn’t really seem to be an issue any more. What does legality have to do with it? Where is the Constitutional authority for the government to seize these banks in the first place? Questions of legal and illegal have come to only apply to the private sector.
Isn’t this called money laundering? I mean, I don’t know that much about it but this sounds exactly like laundering.
From How Stuff Works:
Money laundering, at its simplest, is the act of making money that comes from Source A (the Treasury) look like it comes from Source B (the middleman). In practice, criminals are trying to disguise the origins of money obtained through illegal activities so it looks like it was obtained from legal sources. Otherwise, they can’t use the money because it would connect them to the criminal activity, and law-enforcement officials would seize it.
Or it might cause Barney Frank to start blubbering and spitting all over the floor of the House and demand to set the administrative assistant’s salary.
So, what we have here is a huge, heavily armed and violence prone organization who is loaning out money, changing the terms of the deal to take more control of the entity they loaned money to, and is now looking to launder money in order to avoid particular laws they find troublesome.
And I thought this sounded like the mafia?
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