Wednesday, September 24, 2008

Two Reasons Not to Pass the Bailout Bill in its Current Form

From the text of the bill (emphasis mine):

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(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;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

In other words, the Secretary may interpret this Act as allowing him to create whatever rules he deems necessary.

Translation: This bill gives the Secretary the power to do whatever the hell he wants to do.

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.

In other words, the Secretary's actions are not subject to scrutiny from anyone.

Translation: This bill makes the Secretary above the law and answerable to no one.

No one man should ever be handed this much power. Ever.


Tony Arnold said...

This language is scary. Even if the Bush Admin did not abuse this open policy, which I have no confidence that they would not abuse it, you can't predict what the new administration about to enter the White House would do.

According to the language, the White House via the appointed Secretary would be able to nationalize all private assets both corporate and individual.

I believe Nazi Germany passed many similiar laws in the 30's.

JMG said...

Apparently, this bill wasn't drafted in just the past week since the markets have taken such a bad turn.

[White House Deputy Press Secretary Tony] Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.

So they've been working on this plan for weeks or months in anticipation of a financial crisis, yet instead of acting to prevent a crisis, they create a plan for a financial dictatorship with Secretary Paulson as the dictator?

Smells fishy to me.

Tony Arnold said...

So Bush pulls a coup if McCain loses?

JMG said...

You're not the first to speculate about that possibility. He certainly has all the tools in place to do so. Of course, that would cause a revolution, and I would think that even he would realize what a mistake that would be.

Tony Arnold said...

I was not being serious, but I don't like the draconian changes I have seen in his tenure.

JMG said...

I figured you were joking, but sometimes I wouldn't put anything past the Bush administration.

Tony Arnold said...

One thing that is just killing me on this whole issue is that the very firms that are first in line for the bailout are also the firms just added to a government investigation into fraudulent actions.

So you, my elected officials, admit that you are about to bailout companies with my money that you suspect of being frauds?

Do any of you idiots in Washington ever think about what you are doing and saying?

JMG said...

Yes, they're thinking about it. They're thinking hard about it because they are not only getting fat campaign contributions from these companies, but they'll go to work for these places once they leave Congress.

Ayatollah Mugsy said...

The Bush administration's disregard for government checks and balances and the rule of law is disgusting -- especially in a country that regularly criticizes other nations' undemocratic practices.

I suspect that White House staffers occasionally quote the line from the Gettysburg Address about "government of the people, by the people, for the people," and then the room busts out laughing.

JMG said...

I can picture that, Mugsy. After all, to them the Constitution is just a g--d---- piece of paper.