Read the whole thing, but don't miss these highlights:
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time
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.
This act makes Hank Paulson the $700 billion King of Wall Street.
Comments
Hey, not to be a pain here but the fact that the bail out is $700 billion doesn't mean it's a bad idea. (I have no idea if it's a bad idea or not -- my first reaction is that $700 billion is just too much, but I don't find my own reaction here all the convincing.)
I don't really know if it is a good idea or not, either. I'm just astonished at the amount of money and authority given to one unelected individual.
Rumsfeld and Wolfowitz weren't elected either. And they were given much more money.
But that money was subject to at least theoretical oversight by Congress.
Once Hank gets $700b, he is subject to no law or agency. I guess Congress could repeal the act, but we'd still own whatever Hank had bought.
BTW, we'll never really know if this was a good idea. The only reason those securities are "illiquid" is because nobody wants to sell them for what someone else would want to pay for them. The government is stepping in and buying them for a price that Hank deems fair, but that will also, I assume, let securities holders survive.
The assumption is that the real market price of those securities would be so low that the financial system would collapse under the weight of all the bankrupt entities that hold those securities. That assumption will never be tested.
I should add, parenthetically, that even all $700 billion of the loans go bust, that's still only 1/5 of the cost of the Iraq war (estimated at 3.5 trillion by Joe Stiglitz).
The more I read, the more it sounds crazy to do this "no questions asked", which seems to be what Bush wants.
I agree. It's another war resolution. Two years of unsupervised spending by an administration that is yet to be determined isn't going to fly.