Congress is poised to enact a massive bailout to the financial industry giving the Treasury Department a $700 billion allowance to purchase the toxic mortgage securities that now threaten our entire way of life.
Read that proposal. It is short. It gives tremendous power and discretion to Secretary Paulson.
And it makes sure that no one suffers but the taxpayer. I thus submit a modest proposal.
The proposed legislation gives the Treasury the authority to purchase mortgage-related assets, and spend up to $700 billion to do it. It allows the Treasury to hire financial institutions as agents. And it immunizes every decision of the Secretary--making his actions unreviewable by any court or agency. This legislation is just asking to be abused and I have no doubt many people will make fortunes taking advantage of the situation. And it says nothing about what we, the People should get in return. I want my pound of flesh, and just a wee bit of oversight.
I start with the assumption that the bailout is going to happen. I don't know whether it is truly necessary to avoid catastrophe, but that isn't particularly relevant. Whether or not a bailout is economically necessary, it is clearly a political imperative and Congress will make it happen.
So, dear Representatives and Senators, please consider a couple of small, but meaningful friendly amendments to the bill as it stands:
First, any company that wants to sell assets under the plan should first fire its CEO, CFO and entire board of directors, with no severance payments. Their stock options and grants should be extinguished as well. If you can't get rid of the people who caused this mess, you don't get the bailout. Period.
Second, any company selling securities to the Treasury must open its doors wide and allow unfettered access to its documents, systems and people. We're going to need to get to the bottom of this mess and should not have to spend time wrangling over subpoenas and discovery requests. Any information obtained this way goes to the Justice Department.
Third, impose meaningful review of the Treasury's actions. As the legislation stands, the Treasury Secretary is given absolute discretion. It's like turning him into a Roman emperor--and we know how well that worked out in Rome.
This is absurd. There must be oversight of the people's money and how it is spent. Did we learn nothing from the Iraq debacle? When essentially unlimited dollars can be spent without oversight you will have minor bureaucrats awarding no-bid contracts to their cronies, billions will be lost and we won't be able to figure out where it went or how to get it back.
You cannot fix corruption with more corruption. Imposing reasonable oversight will not unduly impede the Treasury, and give both the appearance (and perhaps the reality) that someone is minding the store.
So that's it. To use the lingo of the day, my proposal merely applies lipstick to a pig. This bailout stinks like a fetid sty no matter how it is implemented.