The New National Bank?...Not learning from history!

I've often tended to wonder if politicians ever consider history when drafting legislation...I mean, after all if something was a horrible idea in let's say the 1830s, attention might be needed if considering the same or similar idea in 2008. After Secretary of the Treasury Henry Paulson and Chairman of the Federal Reserve Ben Bernanke released their plan to buy $700 billion in bad mortgages last week and pushed both houses of Congress to pass it before most could even read the text, I'm convinced historians in our elected officials we cannot make. Let's take a look at a few reasons Jackson hated the bank in the first place and how our U.S. Treasury aims at becoming the thing we despised.

1. The U.S. Treasury- The Next National Bank?

Henry Paulson's plan to bail out the financial sector might seem necessary to some before doing their homework, but it in effect places control over the world economy into the hands of one man...yes ladies and gentlemen...you guessed it...Henry Paulson. Paulson wishes to designate $700 billion dollars to buying faulty mortgages and mortgage backed securities...a tall order. Suddenly the U.S. government has streamlined the U.S. Bank into part of the executive branch if this works. The Bank of the U.S. was based largely with government intervention, but had several private sector directors on its board. This will have NONE! After including the government conservatorships of Fannie Mae and Freddie Mac as well as the credit facility American International Group (AIG), Paulson (and his replacement) will be in effect at the helm of the largest mortgage handler in the world. A different kind of bank, but just as government controlled (more so in fact) and just as dangerous to capitalism and economic freedom.

2. Concentrating the nation's finances into a single institution

Jackson wanted to kill the Bank of the United States largely because it placed the financial health of the nation in the hands of a Board of Directors. If the Federal Reserve isn't enough of a National Bank (which is the case...scarily enough), this will concentrate enough power into one man...make sure that sinks in...ONE MAN...to sink or swim the world economy. Please note the language of the bill as follows in regards to the review process:

"Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

Just in case you did not catch that...The Secretary of the Treasury's decisions in regards to this $700 billion blank check are not reviewable by ANY court or administrative agency. Ladies and gentlemen if that does not scare some of you slightly, I would be surprised. This section of the bill alone exempts this bill and Mr. Paulson from the very checks and balances placed in the Constitution to keep branches of government from becoming too powerful. And we want to allow one Cabinet Secretary to have this kind of power?

3. The Blank Check...is it really $700 billion?

I just can't seem to get away from the lack of Constitutionality in this bill. Without the checks and balances entitled to Congress and the Judiciary...or even Administrative Agencies within the Executive Branch for that matter, Paulson and Bernanke have $700 in shopping money to take the place of the private sector...the language in the bill, however, is vague enough to even remove the certainty in the dollar amount. See below:

"Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time"

Yes...you saw it..."$700,000,000,000 outstanding at any one time." This is a credit card folks. We as taxpayers give the Treasury $700 billion, not in a lump sum but a $700 limit credit account and allow him to not only spend it, but as these outstanding mortgages are paid off, Paulson or any future Secretary of the Treasury can then respend any money returned to the government. This is not a one time deal if looked at with a fine tooth comb...it is a long term federally funded program aimed at taking more control over the economy out of the private sector and weakening capitalism in America on at least a two year basis, with the possibility of even longer lasting effects. See below:

"Sec. 9. Termination of Authority.
The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act."

It increases the Statutory limit on public debt...that's the money the government expects your great grandchildren to pay back in taxes and cut programs. Why on earth if this money is to be paid back, are we willing to allow the permanent (or semi-permanent) cap on Federal debt to increase to over eleven trillion dollars?

"Sec. 10. Increase in Statutory Limit on the Public Debt.
Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000."

Finally, Capitalism in America can be considered maimed for at least two years by this statement alone:

"Sec. 2-(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them; "

One must ask themselves after examining this, if they, as a people, are willing to lose their financial freedom for at least two years-if no rechartering of the program occurs (the National Bank was to be rechartered indefinitely before its expiration in the 1836 and bankruptcy five years later). As you can see, regardless to the risks of allowing the private sector to straighten itself out...our only option is to do just that. We cannot risk losing our freedoms as a people, be it financial or otherwise, for the sake of a government band aid on the banking system. History has subtle advice to give if we will listen and I'm rather positive the government is wearing earplugs. I'm not sure I want to trust a former banker (Paulson was the CEO of Goldman Sachs) to wield his largest account yet...ours.


Respectfully Yours,

-Mr. Jackson

To read the complete text of the Treasury proposed bill from the New York Times, please visit: http://www.nytimes.com/2008/09/21/business/21draftcnd.html