Funny how when you read something, certain things just jump out at you.
Seven Hundred Billion Dollars and No Pennies. That answers that question.
That's the 12 figure limit on the Proposal to bailout the mortgage securities markets. That's on top of what some doom sayers predict will be the ultimate Five Hundred Billion Dollar cost of the Freddie/Fanny takeover.
I do believe we've reached the stage where a billion here and a billion there are finally adding up to real money.
At first glance, reading the actual language of Treasury's proposed bill it seems more like a resolution of the board of directors, or a trust agreement than a statute. But it immediately answers another burning question that arose when the financial gurus first caught the rumor this would happen: at what price would Hank Pauldon be buying up all these mortgage-backed securities?
Answer: at any price he wants.
Sec. 2. Purchases of Mortgage-Related Assets.
to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
Paulson will also be authorized to sell any of this paper at any price he can get. I'm optimistic since once Treasury puts out it's first take-it-or-leave it offer to purchase these now worthless securities, we'll corner the market on them, have a chance to rate them and imprint the full faith and credit of the United States on the instrument, and sell them back on the market for any amout we say they're worth.
Here's the killer clause, a real Master of the Universe provision:
Sec. 8. Review.
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.
Oh and now the debt limit on the Treasury is bumped up to $11,315,000,000,000. (That's Eleven Trillion Bucks.)
I don't think we ever need worry about some other nation invading the USA and taking us over -- but with this much debt we're ripe for a hostile leveraged buy-out. In fact, if the CEO PrezNitWit were running a corporation this way, he'd be looking for a bailout.
You can say this, the proposal is certainly short and sweet. No doubt the sheer brevity of the proposal will convince most that there's nothing sinister going on, and therein lies the rub. We are a government of limited, enumerated powers and pretty much gave the Secretary of the Treasury sweeping authority to run the entire security/credit apparatus of our economy with little or no restrictions.
We went from a poorly regulated corner of the financial world to a completely unregulated one, ruled by fiat of Hank Paulson according to any arbitrary and capricious rule he deems appropriate.
Paulson can create a new agency to oversee this monstrous endeavor, or not. He can buy securities from some companies and refuse others, letting them die on the vine. No oversight, no determination or recourse for fraud, no insider manipulation prevented, Nothing.
This is the ultimate theft vehicle, with a built in get out of jail free card.