Let them eat dollars

This bailout bill is a joke, an extreme grab that enables the Treasury secretary to basically take any deal he wants, pay for it, without oversight or review. A blatant and ruthless power grab, or, if you prefer, Naomi Klein's Shock Doctrine in action.

To which a rational response is simple: "NO. NO. NO."

From the bill itself:

(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.

So essentially the Treasury Secretary can buy any assets he wants on any terms he likes, he can hire anyone he wants to do it, and he can write any kind of regulation he wants. The Treasury Secretary is now essentially in charge of oversight of the Treasury Secretary, and Congress is abdicating once again its own oversight powers, only getting a report from the Treasury Secretary twice a year.

Again, from the language of the Bill:

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Then comes the excessively scary paragraph:

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.

Full stop folks. This is nuts.

The Treasury Secretary can do anything he deems appropriate without anybody anywhere looking it over--not even a court of law, nor congress or any administrative agency?

While a bailout of the financial sector is debatable on its own merits (I'd prefer not, just to watch the lions of Wall Street boil in their own fetid fat) this bill also constitutes a massive and dangerous power grab by the Executive Branch of this country. Particularly since the Congress seems to be abdicating its own oversight duties and precluding the Court System from being able to intervene as well.

Far better 'bail outs' can be written. Hopefully they will be.


Regarding even the necessity of the bailout:

From Democracy Now:

First some straight talk about the bailout from Michael Hudson, this isn't a bailout for the meltdown of folks who have fallen behind on mortgages--they've been 'melting down' for nearly two years now and no one has lifted a finger--this is a bailout of their creditors. It's a bailout of the gamblers, as Naomi Klein has said. These are people who've gambled. ... we're talking about derivative trades, billions of dollars of bets on which way interest rates will go, billions of dollars of bad loans beyond the ability of debtors to pay.

And Michael Hudson asks the one relevant question:
Why on earth would you want to bail out these creditors?

Let them crash and burn.

AMY GOODMAN: Michael Hudson, we're talking government bailout, which means taxpayers stuck with the bill. Do you think this is the right move?
MICHAEL HUDSON: No, it's the worst possible move, and it puts the class war back in business with a vengeance. Wall Street has been preparing for this for years, because every financial analyst knows that the debts can't be paid. And the question that Wall Street has, if you're going to take a gamble on bad debts that can't be paid, how are you going to come out a winner? And there's only one way of coming out a winner, and that's to make the government bail you out. This has been known for years, because it's inherent almost in the mathematics of compound interest. Every banker I know knew that the loans they were making were going to go bad. They were trying to sell them to somebody else, ultimately expecting them to end up with some sovereign wealth fund.

And now, you had at the beginning of the show, McCain saying that this is the result of fraud and incompetence. The government has now bailed them out. But by bailing them out--Wall Street was coming to terms with the bad debts. When Bear Stearns went under and when Lehman Brothers went under, this began to wipe away the bad debts. And when the debts exceed the ability to pay, there's only one thing any economy can do, and that's wipe them out. Instead, the government is trying to keep the fiction alive. And what Paulson did yesterday, in bailing out AIG, was to try to lock in whoever is the next president not only to further bailouts of Wall Street, ostensibly to protect the public money, but to make it impossible to write down the debts of the four million homeowners that are expected to default this year, impossible to write down the debts of companies that have issued junk bonds, impossible for the country to get rid of this excess of debts that can't be repaid. And you're having really a war now of creditors against debtors. And this is what Wall Street has been preparing for. It needed an emergency to do it. It's really not an emergency at all. This has been building up for many years. Everybody expected it. And breathlessly now, the Secretary of Treasury has done it.

AMY GOODMAN: But, of course, the argument was, if you don't bail out AIG, it could lead to a global financial meltdown.

MICHAEL HUDSON: What you--it's a meltdown of the gamblers, as Nomi said. These are people who've gambled. You had McCain saying they're gamblers. If these people have gambled, we're talking about derivative trades, billions of dollars of bets on which way interest rates will go, billions of dollars of bad loans beyond the ability of debtors to pay. Why on earth would you want to bail out these creditors?