Will The Treasury Department Get Dictatorial Powers?
(Adapted version of Jar Jar Bink's call for emergency powers to Palpatine in Star Wars Episode 2)
There are many troubling things with the proposed "comprehensive" bailout of incompetent Wall Street bankers. Just how troubling it will be remains to be seen until the final version is announced. I'll certainly return to the subject once the announcement has been made.
One troubling aspect of the version the Bush administration asks for (which they may or may not be granted) is that it will grant the Treasury department complete discretion to buy mortgage backed securities from anyone at any price they want without the reach of courts or really even Congress. Except for the $700 billion quantity limit, there will be no checks or limits or accountability for the actions of the Treasury department. Regardless of how much money they unnecessarily waste on Wall Street banks, whether out of incompetence or out of cronyism/corruption, there will be no possibilty for courts to intervene and no possibility of prosecuting anyone. While there will be a provision saying the Treasury department should safeguard taxpayer's interests, that provision is in practice meaningless as the Treasury department will have full discretion in interpreting what that provision means. And of course, if they really had taxpayer's interest in mind, they wouldn't have come up with this package in the first place.
The Democrats appears to be all for this power grab. The only hope to stop this comes if they insist on putting into this bill their desired various other spending plans and the Republicans insist on stopping those plans. Unfortunately, it appears more likely they in "bipartisan" spirit will agree to a compromise.
Update:: It now appears that the Democrats will in fact oppose giving the Treasury department unlimited powers, while also demanding limits on executive pay and various spending programs. So maybe I was too pessimistic. It remains to be seen however if they will really be willing to block it if Paulson insist on his version.