21 September 2008

Commentary on the Bailout Plan ...

You can find the text of the proposed legislation here at The New York Times.

Not only is the bailout going to have massively mal-distributional consequences, if enacted in its proposed form the law would essentially not only give the Treasury Secretary complete discretion, but relieves him of any worry about having his decisions challenged or reviewed in, say a court. In short there is no accountability here whatsoever: "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 is completely unacceptable .

Here is some critical commentary from Robert Reich at Politico [1] . . . Paul Krugman at The New York Times [2] [3] . . . Robert Kuttner at Huffington Post [4] . . . Fred Block at Dissent [5] . . . Plus a set of deliciously vituperative and accurate observations from Glen Greenwald at Salon.com [6] . . . Obama is mouthing some of the right words:

But it remains to be seen whether he has either the back bone or the influence needed to stand up to the BushCo bailout plan, to say nothing of altering it in any meaningful way.
Added later: Here is Jack Balkin at Balkinization [7] who is on the money (pun intended):
"I do not oppose emergency plans to preserve liquidity in markets and prevent a further crisis. What I do object to is plenary discretion in the executive in running the nation's financial markets, especially given the history of the past seven years, which has been a sorry parade of venality, incompetence, hubris and failure.

The modus operandi of the Bush Administration has been to use crisis to seize unreviewable power for the executive. Have we learned nothing from the last seven years?"



Blogger Tom White said...

Am I alone in thinking that the CEO's of these companies that have been so incredulously mismanaged over the years should not only be made accountable but be made to sell all their assets and that that money should be put back into the system? And that would be just for starters...

22 September, 2008 01:30  
Blogger Dawei_in_Beijing said...

Like most people I'm for a govt rescue of the financial system but this bailout is a complete sham. We're essentially just buying toxic derivatives from the banks at premium prices. There's no transparency or oversight whatsoever. What's worse, I don't think this will necessarily work.

In my opinion, we need to do the same thing we did with AIG. That is, give the banks loans in exchange for a stake. As a precondition for the loan, the banks need to open their books and reveal how much toxic derivatives they're holding. The ones that are hopelessly insolvent need to be liquidated in an orderly manner. The ones that aren't, should put their derivatives up for sale on the open market and let investors decide the price. What Paulson is calling for is a blank check. He even wants to bailout foreign firms that do a lot of business in the U.S. That's plain wrong.

22 September, 2008 07:27  

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