Obama Testing Sharia Law

Looks like Barry is testing his theories on enacting Sharia Law should he be elected. What else can you make of this?

NOT ALL COUNTRIES guarantee their citizens the right to virtually unbridled freedom of speech. The United States does. Would someone please tell the campaign of Sen. Barack Obama? And the dozing guardians of liberty at the University of Mary Washington?

Mr. Obama, the Democratic nominee for president, is scheduled to speak at a rally at the university today. The public is invited to this forum, on property it, the public, owns. However, signs and banners will not be allowed, according to the organizers and compliant campus officials. Suddenly, UMW is a First Amendment-Free, or at least a First Amendment-Crippled, Zone, subject to the self-serving preferences of politicos. Why does an Obama rally–or a McCain rally or a Nader rally–justify taking a little off the top of Americans’ most fundamental rights?

A UMW spokeswoman says that the Obama campaign required the sign-and-banner ban. That campaign tells us that the ban is for “security” reasons. But a spokesman for the U.S. Secret Service, responsible for protecting presidential candidates, says that the service has no objection to signs at rallies, provided that no “part of the sign could be used as a weapon”–e.g., a heavy metal pole or a sharpened stick. Finally, the McCain campaign tells us, “We encourage people to make signs at our events.”

Regarding today’s event, one would expect better from a campaign bearing the name of a former professor of constitutional law. (See Ambrose Bierce’s definition of a lawyer: “one skilled in circumventing the law.”) And one would expect much better from a university that, in pursuit of a day of celebrity, a boost in prestige, and profits from its book store’s planned commemorative Obama T-shirts (now scotched), shaves away an American liberty purchased by men who turned white snow red and dry dirt wet with their sacrificial blood. This is a lot to swap for a mess of pottage. Remarks the Rutherford Institute’s John Whitehead, who has turpentined the Bush administration’s civil-rights record, “The Secret Service has a better free-speech viewpoint than the college.”

The First Amendment guarantees the freedoms of religion, speech, the press, peaceable assembly, petition of the government. Will one who aspires to the title Defender of the Constitution begin inhibiting these First Freedoms even before he is in office–at a public university?

Free speech means you have the right to hold up a sign, to unfurl a banner, to wear a T-shirt or create music, to pass around handbills–or newspapers–expressing your views at any public event. This is doubly true at campaign rallies–quintessential political forums–where such expressions are subject only to narrowly drawn “time, place, and manner” restrictions. Says Kent Willis, chief of the ACLU-Virginia and a Fredericksburg resident: “Mary Washington may be able to impose some restrictions on the size of signs or the materials used in them, but we do not believe the school can legally ban all signs at an outdoor political event to which the public is invited.”

Furthermore, the very speech we must be most careful to protect is that which is most onerous to us. Our natural inclination is to shut up the Other Side. The problem is, many days we are the other side.

America’s fundamental freedoms–more in danger of being whittled away than stolen in one fell swoop–must be defended everywhere, including in our own backyard. The Obama campaign and Mary Washington need to back off this odious policy. An opinion printed in Magic Marker should never be contraband at an open American political event–and if that emblazoned thought interferes with the atmospherics of some partisan stagecraft specialist, that is a bearable tragedy.

Today’s Obama-Biden rally is set for 5:15 p.m. Gates open at 3 p.m. We hope the event, part of a history-making campaign, packs the campus. If you go and wish to take a sign, feel free to cut out the box below, write your own message, paste it to some cardboard, and show off your point of view. Or make your own sign or banner from scratch.

We trust that the tonic of Jefferson and Madison is still the drink of choice at the college up the hill. That libation doesn’t mix well with tincture of Tiananmen.

What’s little Barry going to ban next? Someone bringing a bag of pork rinds? What a tool.

Speaking of tools, any bets that this appears in the MJS? I didn’t think so.

HT to Jenn of the Jungle.

Back to the Drawing Board

House Kills The Big Tarp

Well, the House killed The Big Tarp. I’m curious to see what the next version will look like if there is one. Hopefully, it will kill Fannie, Freddie and the Community Reinvestment Act.

Update: I’m watching a news conference on Fox where Pelosi and Frank are blaming the GOP for the defeat of the bill. WTF? Pelosi couldn’t deliver her side of the aisle. Looks to me like the botox has finally hit Pelosi’s brain.

The Big TARP

Well, the bill emerged from the bowels of Congress over the weekend and is being debated in The House. The bill, yclept “TARP” for “Troubled Assets Relief Program” is the working name for the bill called “Emergency Economic Stabilization Act of 2008″. You can see a copy, in PDF format, here.

Assuming the details are circulating, the markets don’t seem too impressed. The Dow was down 283 at the time of this post.

I’ve skimmed over the bill (now at 109 pages, up from Paulson’s original three pages) and have noted the following.

Capped “C” level pay at $500,000 for deduction purposes. I’m OK with that. I blogged about it earlier. No bonus pay simply because you didn’t “do as badly as the other guys”. It also gives the politicos some ammo for election time. {Shrug.}

There are several reference to “protecting taxpayers” which is nice. Will it happen? Who knows. At least Congress has not resorted to it’s usual “screw the taxpayers” mantras.

Here’s a point I found interesting. It starts on Page 34, line 23, “WARRANTS AND DEBT INSTRUMENTS”. I’ve reformatted it a little to make it fit and have highlighted certain portions if you care to read it here.

(1) IN GENERAL.—The Secretary may not purchase, or make any commitment to purchase, any troubled asset under the authority of this Act, unless
2 the Secretary receives from the financial institution
3 from which such assets are to be purchased—
4 (A) in the case of a financial institution,
5 the securities of which are traded on a national
6 securities exchange, a warrant giving the right
7 to the Secretary to receive nonvoting common ———–> The AB would like to see this as Preferred Only.
8 stock or preferred stock in such financial insti
9 tution, or voting stock with respect to which,
10 the Secretary agrees not to exercise voting
11 power, as the Secretary determines appropriate; ——–> Gov’t owns stock but cannot vote it. Good. Prevents nationalization.
12 or
13 (B) in the case of any financial institution
14 other than one described in subparagraph (A),
15 a warrant for common or preferred stock, or a
16 senior debt instrument from such financial in
17 stitution, as described in paragraph (2)(C).
18 (2) TERMS AND CONDITIONS.—The terms and
19 conditions of any warrant or senior debt instrument
20 required under paragraph (1) shall meet the fol
21 lowing requirements:
22 (A) PURPOSES.—Such terms and condi
23 tions shall, at a minimum, be designed—
24 (i) to provide for reasonable participa
25 tion by the Secretary, for the benefit of

1 taxpayers, in equity appreciation in the
2 case of a warrant or other equity security,
3 or a reasonable interest rate premium, in ——–>Taxpayers share in any possible upside.
4 the case of a debt instrument; and
5 (ii) to provide additional protection
6 for the taxpayer against losses from sale of
7 assets by the Secretary under this Act and
8 the administrative expenses of the TARP.
9 (B) AUTHORITY TO SELL, EXERCISE, OR
10 SURRENDER.—The Secretary may sell, exercise,
11 or surrender a warrant or any senior debt in
12 strument received under this subsection, based
13 on the conditions established under subpara
14 graph (A).
15 (C) CONVERSION.—The warrant shall pro
16 vide that if, after the warrant is received by the
17 Secretary under this subsection, the financial
18 institution that issued the warrant is no longer
19 listed or traded on a national securities ex
20 change or securities association, as described in ————->Boilerplate stuff but prevents games.
21 paragraph (1)(A), such warrants shall convert
22 to senior debt, or contain appropriate protec
23 tions for the Secretary to ensure that the
24 Treasury is appropriately compensated for the

1 value of the warrant, in an amount determined
2 by the Secretary.
3 (D) PROTECTIONS.—Any warrant rep
4 resenting securities to be received by the Sec
5 retary under this subsection shall contain anti
6 dilution provisions of the type employed in cap ————->Standard anti-dilution provisions. Good.
7 ital market transactions, as determined by the
8 Secretary. Such provisions shall protect the
9 value of the securities from market transactions
10 such as stock splits, stock distributions, divi
11 dends, and other distributions, mergers, and
12 other forms of reorganization or recapitaliza
13 tion.
14 (E) EXERCISE PRICE.—The exercise price
15 for any warrant issued pursuant to this sub ————->Treasury decides when to take the profits, if any.
16 section shall be set by the Secretary, in the in
17 terest of the taxpayers.
18 (F) SUFFICIENCY.—The financial institu
19 tion shall guarantee to the Secretary that it has
20 authorized shares of nonvoting stock available
21 to fulfill its obligations under this subsection.
22 Should the financial institution not have suffi
23 cient authorized shares, including preferred
24 shares that may carry dividend rights equal to
25 a multiple number of common shares, the Sec-

1 retary may, to the extent necessary, accept a
2 senior debt note in an amount, and on such
3 terms as will compensate the Secretary with
4 equivalent value, in the event that a sufficient
5 shareholder vote to authorize the necessary ad
6 ditional shares cannot be obtained.
7 (3) EXCEPTIONS.—
8 (A) DE MINIMIS.—The Secretary shall es
9 tablish de minimis exceptions to the require
10 ments of this subsection, based on the size of
11 the cumulative transactions of troubled assets ———————>Caps amounts to any one institution.
12 purchased from any one financial institution for
13 the duration of the program, at not more than
14 $100,000,000.
15 (B) OTHER EXCEPTIONS.—The Secretary
16 shall establish an exception to the requirements
17 of this subsection and appropriate alternative
18 requirements for any participating financial in
19 stitution that is legally prohibited from issuing
20 securities and debt instruments, so as not to
21 allow circumvention of the requirements of this section.

IMHO, this is a key part of the bill since it outlines the structure of the deal.

You can tell this came from Paulson and his staff since Congress has no clue about financial structuring.

One thing that bothers me is that if an institution does not have enough stock to cover the transaction, or the firm is delisted under SEC rules, why in the world would you want to take senior debt? At that point, any senior debt would be pretty much without value UNLESS there was sufficient collateral to cover the transaction. Senior debt does provide some liquidation protection in terms of seniority but I would like to see any conversion of equity to debt by Treasury carry a “senior” clause…i.e. first in line in case of a liquidation. Then that provision would make it more palatable.

I also like the provision that the government, despite being a shareholder, cannot vote the shares. Depending on the institution, the government could be the majority shareholder. Being able to vote those shares is tantamount to nationalization. In this regard, I would like to see the government take Preferred Stock, if available, as the primary source of value compensation. In case of a liquidation, the Preferred Stock has priority over Common Stock and any dividends from the Preferred would go back to Treasury.

Two other key points. The first is that Treasury may elect to insure certain assets. This is for risk evaluation and accounting purposes thus freeing up the reserves that financial institutions are holding against those assets. This in turn frees up funds to inject liquidity into the system from the private sector. Congress, realizing that there is no “one size fits all” solution, permits Treasury to determine the value of the assets on a case-by-case basis with attendant reporting to Congress on the methodology. This is outstanding….or should be, anyway. The provision permits the most efficient use of insurance since price of the insurance will be priced on the actual risk.

Finally, a quick note on the makeup of the Board (page 15). Chairman of the Fed, SecTreas, FHA Director, SEC Chairman, SecHUD. I like this, a small board is more efficient than a huge board with a purely political agenda. SecTreas will pick someone to run this thing. I’ve posited Mitt Romney, Michael Bloomberg or Robert Rubin as possible CEOs. It should be someone outside of the government. Give them a five year contract at market rates, let them choose the employees and give the employees bonuses for exceeding the financial targets. (The CEO would not be bonus-eligible however.)

Is this bill perfect? No. Is it OK? Yes, if TARP is allowed to move quickly and, within the perameters outlined above AND without political interference, then there is a high probability of success IMHO. You’re never going to have a perfect bill.

Two other clauses should be added. The first is the revocation of the Community Reinvestment Act which is the core of the problem (think Sub-Prime loans) since mortgages were given to people under this act who had no business getting mortgages. The second clause should be that all new mortgages should be held by the underwriters for at least five years. In the case of ARMs, three years past the rate-reset.