Keep The Fox Out Of The Henhouse

On September 20, 2008, the text of the “Draft Proposal for Bailout Plan” was released. Divided into twelve sections, it is the latest in a series of Bush Administration actions, which if passed in its proposed form, would further weaken our constitutional protections. Every section, beginning with Section 2, transfers virtual economic dictatorial authority into the executive branch of government in the person of the Treasury Secretary of the United States.

Section 2 gives the Secretary virtually unlimited authority to use $700 billion of taxpayer money for the purchase of mortgage-related assets.

Section 3 directs the Secretary to exercise his authority while taking into consideration prevention of the disruption and stability of financial markets and the banking system and the protection of the taxpayers. This Section provides no details of how this Bailout intends to implement these most important taxpayer protections. But rather, it leaves the methods to the discretion of the Secretary.

Section 4 requires congressional reporting while Section 8 makes any decisions taken by the Secretary under the authority granted by him by this Act not subject to review by our courts or any other administrative agency. In other words, any meaningful oversight or reduction in the authority granted to the Secretary under this Act requires a further Act of Congress.

Nowhere in this proposed Act is a prediction or other estimation of its ultimate beneficial effect. It is a $700 billion reward for bad behavior in an election year. By raising the statutory limit on the public debt, to $11.3 trillion, it puts the country on a faster track to financial insolvency. The same government that did the credit industry a favor by passing the Bankruptcy Act amendment that took effect on October 1, 2005, further encumbering and hurting our taxpayers, wants to apply a less rigorous standard to corporate bad behavior and burden the taxpayers with the bill.

I am against this Bailout. This Draft Proposal for Bailout is flawed by the cynicism and expediency with which it was drafted. It once again puts the fox into the henhouse. Those who advocated for a completely free financial market should pay a free financial market price for their advocacy. The taxpayers should not suffer the consequences.

Link to 9/20/08 Text of Draft Proposal for Bailout Plan:

http://www.nytimes.com/2008/09/21/business/21draftcnd.html?scp=12&sq=Paulson&st=cse