Obama Admin. Skirting Congress on Bailout: Report - NBC New York

Obama Admin. Skirting Congress on Bailout: Report



    Obama Admin. Skirting Congress on Bailout: Report
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    President Obama and his Treasury Secretary, Tim Geithner, have talked tough on Wall Street greed, but they are also counting on private investors to unclog the financial system.

    President Barack Obama has spoken out against " taxpayer subsidized excessive compensation packages on Wall Street," but his administration is quietly crafting future bailout packages that sidestep Congressional pay restrictions, anonymous government officials told the Washington Post.

    Whether by setting up a "middleman" to lend to troubled institutions -- thus evading ownership obligations -- or by exempting certain companies that participate in government programs to buy up toxic assets from newly passed rules, Obama administration lawyers are arguing that investor participation is now the most important goal, the Post reported

    Some businesses have chaffed at being required to temper compensation packages or give up ownership control of their companies to participate in government bailouts.  

    But at least one legal expert said that to win particpation it may not be legal for the government to exploit loopholes that will circumvent the will of Congress.

    "They are basically trying to launder the money to avoid complying with the plain language of the law," David Zaring, a former Justice Department lawyer, told the Post. "They are trying to create a loophole to ignore Congress, and I think the courts will find that ridiculous."

    Rep. Edolphus Towns, chairman of the House Oversight and Government Reform Committee said he may try to preemptively thwart such a plan.

    "We have to make certain that if they are using government money in any sort of way, there should be restrictions," he told the Post.