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Author Topic: BAILOUTS ARE UNCONSTITUTIONAL  (Read 1423 times)
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crazybabyborg
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« on: December 06, 2008, 10:38:11 PM »




Unconstitutional Bailout
By ANDREW NAPOLITANO | July 17, 2008
http://www.nysun.com/opinion/unconstitutional-bailout/82095/


When Treasury Secretary Henry Paulson announced that the government would provide a credit line to shareholders of Bear Stearns in order to prevent the giant investment bank from collapsing, he was consciously making a profound choice to use taxpayer dollars to save one bank and not to save another.

On Friday, IndyMac, a huge California-based institution, with billions in assets, was permitted to expire while depositors waited in long lines outside of bank branches to retrieve the portions of their deposits and investments which were insured.

The treasury secretary was at it again with an announcement on Sunday evening to the effect that the American government would grant a line of credit from the federal treasury to Fannie Mae and Freddie Mac in excess of the billions already granted by Congress.

Fannie Mae and Freddie Mac were once owned by the federal government, but no longer are. They now are owned by private investors, and thus it is simply unconstitutional for the feds to use tax dollars or bonds or guarantees of loans backed by tax dollars to bail them out just as it was unconstitutional to use tax dollars to save Bear Stearns.

There are logical reasons and constitutional reasons for this. The logical reasons are that poorly run businesses or those that do not adapt to changing economic forces should fail. It is a basic law of economics; you don't throw good money after bad. Someone will pick up the pieces and make a profit off of them. Someone else will buy and service the mortgages.

The constitutional reasons get us back to Mr. Paulson's choices. How can the feds decide who to bail out and who to let die? Virtually all banks are being challenged by the current credit crunch. So why save Fannie and Freddie but not Indy? In another generation, why Chrysler but not DeLorean? There is simply no line that can be drawn, with intellectual honesty and constitutional fidelity, separating those shareholders saved by federal taxpayers and those allowed the fate to which their risks have exposed them.

Here's why. The federal government is one of limited powers. It may only constitutionally engage in behavior that is specifically authorized in the Constitution. The Constitution's General Welfare Clause requires that all the federal government's expenditures be for the general welfare, such as a highway, or a national park, or a military installation; something from which everyone can directly benefit. Shareholders of Freddie, Fannie, and Bear Stearns are a small limited class of persons whose well-being hardly enhances the general welfare.

The reason this type of behavior was never authorized is two-fold. The first is that the federal government cannot favor shareholders of one company by relieving them of their risk or debt over shareholders of another similarly situated company whose risk and debt is permitted to stand without violating the Equal Protection Clause of the Constitution. That clause requires that the federal government treat similarly situated persons and entities in a similar way.

Second was a fear the Framers had that if the government became a market participant, it would tilt the playing field in favor of itself or its patrons. That's why they wrote in the Contracts Clause that no state may interfere with a contract, and in the Due Process Clause in the Fifth Amendment that the federal government as well may not do so.

If Fannie Mae or Freddie Mac or any entity collapses because of market forces or poor management, and the Congress insulates the shareholders of the collapsing entity from the consequence of the collapse, it is favoring those shareholders over other shareholders of other companies that might also be on the verge of financial demise.

It simply does not matter whether Congress favors the shareholders by loaning them money, by guaranteeing to their lenders that the taxpayers will repay the loans, or by purchasing their equity. The result is the same. Their contracts � their agreements with Fannie Mae and Freddie Mac � are not being enforced. And they are being relieved of a debt while other shareholders of other corporations are not.

Perhaps the only public agreement that Jefferson and Hamilton had about the Constitution was that the federal treasury would be doomed and capitalism would expire if the treasury became a public trough. If it does, the voters will send to Congress those whom they expect will fleece the treasury for them. That's why the Founders wrote severe spending limitations into the Constitution.

Everyone in government takes an oath to uphold the Constitution. Shouldn't we expect that they will comply with their oaths?

Judge Napolitano, who was on the bench of the Superior Court of New Jersey between 1987 and 1995, is the senior judicial analyst at the Fox News Channel. His latest book is "A Nation of Sheep."
« Last Edit: December 06, 2008, 10:43:47 PM by CBB » Logged
WhiskeyGirl
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« Reply #1 on: December 07, 2008, 08:22:59 PM »

SCOTUS can fix those pesky little problems.  One view -

Quote
Welcome to Obama's America: the USSA

By Peter Muehleis December 7, 2008

(snip)
You have heard it said, those who don't learn from history are doomed to repeat it. For those who can recall their years in high school or college and those history classes we all had to take, you probably studied fascist Europe of the 1930s and 1940s or the Russian Revolution and the rise of communism. Your class discussions certainly touched on how these oppressive forms of government could never happen here in America, after all, we have our freedoms secured by the Constitution. Not only that, "we the people" have the power and we are too sophisticated to let that happen.

Does that include the Builder Bob generation?

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History is littered with leaders who came to power promising to deliver the masses. Hope, unity and a pledge to crack down on the perceived "boogie men" was the recipe for change. Change indeed, always was the result, but to what end, and at what cost.

Does this mean the the Cattlemens Beef Association will be siting next to PETA at the Obama celebratory events in January, 2009?

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The fringe groups on the left such as the ACLU and ACORN will now have legitimate standing with a government ready to dismantle our free enterprise system. Sound far-fetched? Not my words but from the mouth of Barack Obama," there is a legal rationale for bringing about economic change through the courts." This basically changes the courts from arbiters of the law into super-legislators. The time is coming when our right to bear arms too will be seriously challenged, as has already happened with freedom of speech. The so-called "Fairness Doctrine" is nothing but a government license to monitor acceptable speech along with "big brother" sanctions for those not in compliance. Chicago-style politics is a trademark of the Obama machine which already is "blackballing" media outlets that dare to ask tough or embarrassing questions.

I wonder if there is an Obama list, like the McCarthy list of the last century?  Maybe a list maintained by RE?  What will happen to those that refuse to drink the Kool-Aid or to pretend we do?

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The indoctrination of socialist ideas is rampant on college campuses and soon only certain views will be acceptable (if you want a good grade).

Socialism the world over, has been an abject failure wherever it has been tried, yet we have some that are absolutely giddy over the notion that we are about to jettison 230 years of blood, sweat and tears for a system that promises utopia but delivers chaos.

Nothing is inevitable but I believe we have crossed a threshold that will be difficult to reverse. Welcome to the United Socialist States of America.

I have a lot of warm fuzzy tendencies.  Stealing from people (by any means) and killing them is just wrong.  Stealing by any other name, like 'taxation' is still stealing.

Read more here -

http://www.sheboyganpress.com/article/20081207/SHE06/812070393/1110

just my humble opinions
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
WhiskeyGirl
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« Reply #2 on: December 09, 2008, 09:58:50 AM »

I have come to believe that the founders intended to limit the control of the federal government for many good reasons.  I think they built good firewalls to prevent things like corruption from spreading from one state to another.  What is corruption?

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Improper and usually unlawful conduct intended to secure a benefit for oneself or another. Its forms include bribery, extortion, and the misuse of inside information. It exists where there is community indifference or a lack of enforcement policies. In societies with a culture of ritualized gift giving, the line between acceptable and unacceptable gifts is often hard to draw. See also organized crime.

Organized to put the nation in deeper debt for the benefit of a few...  Repave roads, rebuild schools, change light bulbs...   Why aren't these communities digging deeper?  Why continue to bleed money from a bankrupt nation?  Corruption?

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Prior to the American Revolution, the most spectacular examples of corruption center on the colonial governors--a dreary succession of royal and corporate placemen whose chief concern was grabbing as much as they could before returning home. Most assumed they had every right to do so. Capt. Samuel Argall, deputy governor of Virginia from 1617 to 1619, boasted openly of his intention to "make hay whilst the sunne doth shine, however it may fare with the generality." No less audacious was Governor Benjamin Fletcher of New York (1692-1698), who took protection money from pirates, shook down Indian traders, bilked the customs, padded military payrolls, and stole funds raised to pay the provincial debt. "To recount all his arts of squeezing money both out of the publick and private purses would make a volume instead of a letter," grumbled one of Fletcher's contemporaries.

Wow.  Freddi/Fannie/TARP/Public Works are just the beginning...  Who will represent taxpayers in this bankrupt nation?  Morals?  Ethics?  Economy?

Quote
Still another source of political corruption in the colonies was the profitability of land speculation. Angling for a share of the apparently endless supply of American land, investors and politicians on both sides of the Atlantic left a trail of chicanery, inside dealing, favoritism, and outright theft that even now staggers the imagination...

Wow.  Feddie and Fannie in the colonies. 

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...Unlike their eighteenth-century predecessors, who had associated corruption with undue executive "influence" over legislative bodies, they affirmed the beneficial role of political parties and did not question the capitalist system. The remedies they instituted were correspondingly moderate: civil service legislation to place government jobs beyond the reach of spoilsmen; immigration restrictions to curb the power of big-city bosses; federal and state laws mandating direct primaries and restricting or regulating corporate campaign contributions; and, overall, a trend toward government by nonpartisan professionals sitting on commissions, bureaus, boards, and agencies that could not be controlled by party bosses.

What good will an "Auto Czar" do if he has strong bias in favor of the status quo?  Isn't willing to present unpopular ideas?  Isn't willing to stand up for taxpayers?

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Another, contemporary trend, altogether new in its scope and magnitude, is the spread of corruption financed by the stupendous resources of the illegal drug "industry"--gross sales of which neared the $120 billion mark in 1988, far exceeding the combined profits of the nation's five hundred largest industrial corporations. According to some authorities, payoffs to police, judges, and other officials have brought about the effective disintegration of law enforcement in many parts of the United States. If that is so, then this constitutes corruption of a kind and on a scale for which there are simply no precedents in American historical experience.

Maybe the new administration will go after drug profits.

http://www.answers.com/topic/corruption

The more things "change" the more they stay the same.  Gutting the pig, for hundreds of years, and it's escalated.  What has happened to the protections in the constitution for citizens?  Why isn't the constitutional firewall working?

jmho
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
crazybabyborg
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« Reply #3 on: December 09, 2008, 12:58:22 PM »

This whole country is being bought by China.

Silently and Surely we are selling out to the Chinese that which we have fought to defend and die for.

With every dollar given in bailout, they own a bit more.

Our government has put aside the principles of foundation, the Constitution itself, that protect Americans as Americans, and we're sold.

We are working for carpetbaggers who kill female infants and Christians, and who squelch any disagreement with an iron fist in public squares.

They have the wealth to buy America because they pragmatically turned to capitalism and free markets by watching the once successful US economy. Capitalism, by it's nature, is stronger than our watered down mix of Socialism, Government programs and Taxation. We are owned by what we once inspired, and the last few months with a Trillion dollars in reckless bailouts have sealed the deal.
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