Sunday, April 05, 2009

Obama, Geithner and Bair are committing a crime

Read the law they're breaking here. It mandates that insolvent banks must be taken over by the FDIC unless they can come up with a private plan to restore adequate capitalization.

3 comments:

Anonymous said...

IANAL, but I must be missing something -- I can't see where it says that the FDIC *must* take control of banks. It looks like that is a possibility, but there are plenty of alternative options, including options that the government believes will help, even if not explicitly enumerated. The structure appears primarily to affirm options rather than require them.

I am surprised to see the section on senior executive compensation, though. Unless I'm reading the version history wrong, that seems to have been in there since 2007 (!).

(Does any else think the law looks like a huge unreadable function that needs refactoring?)

Trimbo said...

IANAL either so section f.3 is my guess.

I guess one just has to ask, what is the "spirit" of this law? It's to make sure that corporate cronies don't influence the government's duty to step in and take over a failing bank.

Here's an article from a couple months ago in the Huffington Post. I wish I had read it back then.

Mark said...

The loophole is that the administration is agreeing with the banks in their claims that they're not insolvent. That's what these stress tests are all about. If they are found to not be insolvent, then there's no need for the FDIC to come in.