Monday, September 29, 2008

King Henry's powers

Mr. Henry Paulson, the Treasury Secretary had originally submitted a bailout plan to the Congress that was all of three pages long and asked Congress to give him explicit authority to do what he seems fit with an arbitrary of amount of $700,000,000,000.00. Specific wording in the three page plan that amounted to hubris included the following:

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.

Congress said that Mr. Paulson overreached and asked for too much and spent about a week crafting legislation that aims to curtail Mr. Paulson’s powers.

Well, here is what we have after the exercise. From here.
  • Mr. Paulson can choose to buy from any financial institution that does business in the United States, or from pension funds, with wide discretion over what he will buy and how much he will pay.
  • Under some conditions, Mr. Paulson can choose to bail out foreign central banks.
  • Under the bill, Mr. Paulson is to buy the securities at prices he deems appropriate. Mr. Paulson may set prices through auctions but is not required to do so.
  • Mr. Paulson is directed to “make such purchases at the lowest price” that is “consistent with the purposes of this act.”
  • Mr. Paulson does not need the approval of the Fed chairman or the oversight board to buy financial assets not linked to mortgages.

Here is the kicker:

  • Mr. Paulson is to be one of the five members of the board watching over his own actions...

That sure is a fine recasting of King Henry's powers...

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