Calculated Risk got me thinking about this again. I have two very simple questions.
Question 1: When Congress passed Section 13(3) of the Federal Reserve Act, did they intend to delegate their powers of taxation and spending to the Federal Reserve? For example, could the Fed make me a 50-year zero-interest loan to take a trip to Hawaii, simply by declaring “unusual and exigent circumstances”?
When buying assets with created money, there is a continuum between actions that are clearly monetary (e.g., buying Treasuries) and actions that are clearly fiscal (e.g., financing my vacation). Where does the TALF, making non-recourse (!) loans against potentially bad collateral, fall on this continuum? How about Maiden Lane (Bear Stearns bail-out), Maiden Lane II (AIG bail-out), and Maiden Lane III (more AIG bail-out)?
Are these activities, you know, legal?
Question 2 is even simpler: Identify the U.S. statute authorizing FDIC to insure anything other than deposits.
Or does even asking these questions make me a crackpot?
maybe, but you’re our kind of crackpot(if you are….)
Nemo for president!
That’s what they get for drafting vague legislation. Besides, Sheila says there won’t be any losses.
auctoritas, non veritas, facet legem. bitch.
“sovereign is he who decides the exception” — schmitt.
auctoritas, non veritas, facet legem.
Isn’t that supposed to be “facit”?
I do not seek truth in law. I do wonder when the law started to mean whatever the Executive says it means. Has it really come to this?
law is just a fancy word for divvying up the spoils. no, seriously.
and constitutions are pretty flimsy documents. there are those who would say the most substantial part of one is exactly the part that provides for its own suspension in time of danger — time when norms no longer apply nor guarantee anything, and a reversion to command is necessary. funny, but i don’t the congress objecting too strenuously.
i think the pertinent word at the moment is not law but legitimacy. what’s going on is fundamentally political, or rather, is the economy openly showing its political — that is, oligarchical — face. is this really a surprise?
When Worcester v. Georgia didn’t go his way, Andrew Jackson supposedly said “Mr. Marshall has made his decision, now let him enforce it.”
The simple matter is that the Fed is doing what it wants to do, and no one dares stop it. Stopping it would require (a) understanding what it is doing in something approaching real time; (b) having a strong sense in Congress that (a) is wrong and there is a different, better approach; (c) Congressional appetite to risk being wrong on (b) at the risk of absorbing all the blame from the US public for wrecking the economy. None of these conditions holds.
Only as a matter of trivia, isn’t it implicit in the FDIC’s ability to take a bank into receivership and dispose of the bank’s assets to satisfy the deposit holders that the FDIC is able to take a position in a regulated bank’s assets as well as liabilities? I would imagine the lawsuit between the WaMu holding company and the FDIC should touch on this…