(8 am. – promoted by ek hornbeck)
The various merits and demerits of the proposal to create a fund for the acquisition of toxic securities and derivatives by the Federal government compose a huge list. But one of the key provisions of the bill as currently proposed makes it unpalatable for any reason:
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.
Under no circumstances ought we allow this provision to become law. Yves Smith:
This puts the Treasury’s actions beyond the rule of law. This is a financial coup d’etat, with the only limitation the $700 billion balance sheet figure. The measure already gives the Treasury the authority not simply to buy dud mortgage paper but other assets as it deems fit. There is no accountability beyond a report (contents undefined) to Congress three months into the program and semiannually thereafter. The Treasury could via incompetence or venality grossly overpay for assets and advisory services, and fail to exclude consultants with conflicts of interest, and there would be no recourse. Given the truly appalling track record of this Administration in its outsourcing, this is not an idle worry.
But far worse is the precedent it sets. This Administration has worked hard to escape any constraints on its actions, not to pursue noble causes, but to curtail civil liberties: Guantanamo, rendition, torture, warrantless wiretaps. It has used the threat of unseen terrorists and a seemingly perpetual war on radical Muslim to justify gutting the Constitution. The Supreme Court, which has been supine on many fronts, has finally started to push back, but would it challenge a bill that sweeps aside judicial review?
I urge you to read Smith’s entire post on why this ought to be opposed. FWIW, economists from such disparate backgrounds as Paul Krugman, Tyler Cowen, and Bryan Caplan all agree this proposal is awful in its current form (Caplan, an anarcho-capitalist, has opposed all government bailouts).