Whoa! Bailout Calls for Blank Check, No Accountability

• Section 8 of the Paulson proposal reads: "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."

It makes poor Henry feel uncomfortable.

• "I don't like to be in this position, asking for things and, you know, answering to the American taxpayer," Treasury Secretary Hank Paulson informed the Senate banking committee yesterday.

That is far worse than paying for golden parachutes,which are odious enough in their own right. But this......boggles the mind. No wonder there is opposition from both sides of the aisle.

UPDATE: Bailout Could Deepen Crisis, CBO Chief Says

Asset Sales May Lead to Write-Downs, Insolvencies, Orszag Tells Congress

• In an interview later yesterday, Orszag explained using the following example: Suppose a company has Asset X, whose value is recorded on the books as $100. Because of the current economic decline, Asset X's real value has dropped to $50. If the company takes part in the government bailout and sells Asset X for $50, the company has to report a $50 loss on its books. On a scale of millions of dollars, such write-downs could ruin a company.

But the alternative is to not have transparency for the prices of assets in whatever market. A point Orszag seems to make implicitly when he asks:

• "The key question is: What are we buying and what are we paying for it?"

Because it is us paying this bill. $700 billion equates to about $2,300 per citizen. Many an American who does not have that sort of cash laying around (describes me....you?) might wonder if letting the weak fail on Wall St. will inflict more economic pain than this proposed plan will inflict in the long-term.

My guess is that because people don't really think in the long-term, that a bail-out will pass this week or early next week. Will the check be blank? Will it carry more than token strings? I can only hope, but will not be surprised, if Paulson gets the "nobody can review my decisions" clause passed. Paulson has likely read the Constitution and knows this plan needs such blanket immunity to cover his ass.
- posted by john @ 7:04 PM