The "Emergency Economic Stabilization Act of 2008" contains what looks like a huge loophole. In Sec 101 (e), entitled "Preventing Unjust Enrichment," the current text says the Secretary should prevent unjust enrichment by "preventing the sale of a troubled asset to the Secretary at
a higher price than what the seller paid to purchase the asset." Besides a few huge exceptions spelled out in the text, it looks like a troubled mortgage or security can be sold for profit then re-sold to the Treasury for another profit.
Subscribe to:
Post Comments (Atom)
Posts
4 comments:
I don't see what you're saying. That text sounds to me like "If you paid $20, you can't sell it to the government for more than $20." Company A can sell to company B for $15 or for $25 instead of to the government for $20, but company B then has a cap of $15 or $25 respectively. And so on. I don't see how people can make money off the government that way.
Or I should have said "excess money." If they paid $20 and its only worth $10, that rule still lets them sell to the government for $20.
It doesn't say what I said above.
If X paid $15, but the going rate is $25 and X has a partner Y, here's what they can do. (1) X can sell it to Y for $20. (2) Y can then turn around and sell it back to X for $25. (3) The govt might then buy it from X for $25.
I see.
If X paid $15 and the going rate really did go to $25, that would take care of the problem the government money is meant to replace (the going rate has gone to diddly squat).
My guess is that Big Brother will ask for the dates of transactions to look for such shenanigans (since they aren't required to buy the things, just allowed to do so), but doing so should have somehow been in the law to prevent the old boys club from having a feeding frenzy (if it isn't already over in subsection doomajiggy part whatsadiggy between the tax cut for circus clowns and the money for a new post office in Nowhere Oregon).
Post a Comment