Legal Commentary

Krugman on Bailout: No Deal

By Jeralyn

Paul Krugman says "No Deal" on the $700 billion bailout.

Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

The Treasury Department's fact sheet on the bailout is here and as I mentioned in an earlier post, the text of the legislation is here. I'm an economically challenged type who has to struggle to understand complex financial things that don't involve crime. Marcy at Empty Wheel explains it in a way I can understand:

More...

Here's all you need to know. Hank Paulson is asking for $700,000,000,000. That's $2,333 from every man, woman, and child in the United States.

In exchange for that money, Paulson is unwilling to accept any demands to make markets more transparent, limit executive compensation, or assist homeowners fighting foreclosure. The sole purpose of that $700,000,000,000 is to bail out Wall Street and only Wall Street, but not to fix it, or our larger economy. He is asking to be absolutely unbound by any law when he spends that money.

Atrios also points out this language in the deal:

"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."

According to Bush, we have to do something and to prevent delays from congressional bickering, he wants no other strings attached to the money. Will this be like the Patriot Act, where Congress acts in haste and repents at leisure?

I don't look at it like I have to write a check for $2,333. Rather, it's that $2,333 of the money I already give the Government will go to this instead of something else.

My question is: Is this the right plan for right now? Or is it just putting a piece of tape over a hole in a tire to keep it from going totally flat -- when you remove the tape, the tire is still going to go flat. What would a better solution be? And do we need two solutions, one for right now and one for down the road, or should we wait to implement any fix until we get the single right solution?

Personally, I care less about assessing blame and going after corporate greedsters than I do making sure people don't go belly up and lose their retirement or life savings. What's the best way to accomplish that?

Full post as published by TalkLeft on September 20, 2008 (boomark / email).