Posted by Jonathan Adler:
Sidestepping Bailout Rules:
http://volokh.com/archives/archive_2009_03_29-2009_04_04.shtml#1238859269
It appears that some of the restrictions placed upon the use of
bailout funds is discouraging private sector participation. As a
consequence, the Obama Administration is [1]seeking ways to circumvent
the rules.
The administration believes it can sidestep the rules because, in
many cases, it has decided not to provide federal aid directly to
financial companies, the sources said. Instead, the government has
set up special entities that act as middlemen, channeling the
bailout funds to the firms and, via this two-step process,
stripping away the requirement that the restrictions be imposed,
according to officials.
Although some experts are questioning the legality of this
strategy, the officials said it gives them latitude to determine
whether firms should be subject to the congressional restrictions,
which would require recipients to turn over ownership stakes to the
government, as well as curb executive pay.
References
1.
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040303910.html
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