I just downloaded the 110-page PDF of the discussion draft of the bailout plan (available through CNN (scroll to the bottom of the page). This is by no means a thorough analysis, but by page 5 things are starting to look rather odd. "Troubled assets" are defined as certain mortgages as well as...
...any other financial instrument that the Secretary [of the Treasury], after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purpose of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
In other words, SecTreas still has unlimited leeway in determining what financial instruments qualify for the bailout. He has to "consult" but doesn't have to take advice and only needs to tell Congress in writing what it is he's up to.
There's more (no more blockquotes transcribed from a PDF). SecTreas determines what is and is not a conflict of interest. In Section 113, the junk assets can be held until SecTreas says they can be sold. Private participation in the bailout is to be "encouraged," but there is no enforcement language. Oversight by the Comptroller General extends to the relief programs but not to the SecTreas himself.
In short, I see a lot of holes in this plan, and I'm not sure that the safeguards which were added have any real support. My head is spinning, and I'm going to take a short break before perhaps updating this.
UPDATE: MSNBC has a brief analysis of the plan here. However, here is their analysis of Section 119:
Section 119. Judicial Review and Related Matters.
Provides standards for judicial review, including injunctive and other relief, to ensure that the actions of the Secretary are not arbitrary, capricious, or not in accordance with law.
Meanwhile, the actual text of Section 119 (a)(2)(A) states: "No injunction or other form of equitable relief shall be issued against the Secretary for actions pursuant to section [sic] 101, 102, 106, and 109, other than to remedy a violation of the Constitution." Section 101 is titled "Purchases of Troubled Assets," 102 is "Insurance of Troubled Assets," 106 is "Rights; Management; Sale of Troubled Assets," and 109 is "Foreclosure Mitigation Efforts." That looks like an awfully big loophole for any Secretary of the Treasury who might be somewhat less than scrupulous.
UPDATE #2: Gene12 thoughtfully provided a link to an article at nakedcapitalism.com describing a conference call "for analysts" regarding the bailout proposal:
But the report I got from one person who was on the call was the the questions came from financial services industry members. In other words, this was most assuredly not intended to be a call open to the public at large. If anyone from the media or other member of the great unwashed was listening in, it was by accident.
This is madness.
UPDATE #3: Dealbreaker.com has a transcript of the restricted-access conference call. Here are a couple of excerpts:
9:04 Michael Peace (?) takes the mic "this is very positive...we've worked hard with congress...it'll be good...Neil from the treasury will go over how the warrants works and exec comp"
9:05 Broad discretion for the treasury
And, most disturbingly (bolded at dealbreaker.com),
Some guy from Treasury says he wants people to focus on legislation, not implementation. One of his colleagues says he thinks that's a "very good idea."
Be afraid. Be very afraid.