FinReg21 reports,

While emergency bailout funds helped avert a collapse of the financial system, the Treasury Department now thinks the money should be diverted to helping small businesses and homeowners, a Treasury official said.

Speaking before the Congressional Oversight Panel for the Troubled Asset Relief Program, assistant Treasury secretary Herbert Allison said TARP helped put large banks and the auto companies on a sounder footing.

“It is time to set a new direction for the TARP,” Allison told the panel chaired by Elizabeth Warren, “to account for the recent improvements in capital markets and to address lingering weaknesses in housing markets and small business lending.”

The idea of diverting the money back to taxpayers probably never occurred to him.

The Gulf of Tonkin resolution was used by President Johnson as the legal basis for waging the war in Vietnam, even though it was not a declaration of war. To me, the Tonkin principle is that the executive will stretch its legal authority far beyond the contents of particular legislation. We have already seen many examples of this from the current Administration–the FTC regulating bloggers, ex post regulation of pay, the energy Secretary’s use of billions of dollars of taxpayer money to fund his personal obsession with electric cars, and so forth. I have started calling these arrogant uses of executive power The Obaminations.

I strongly suspect that once health care reform passes, it will evolve according to the Tonkin Principle. The Administration will exercise power and authority far beyond anything that anyone is envisioning as the issue is being debated in Congress this year.