“The market is waiting. The time to act is now.” So said Investors Business Daily, yesterday. In support of their call for Congress to just “sign off now” on Secretary Paulson’s plan to rescue U.S. banks, IBD’s editors point to the proposal’s brevity and “focus” and imagine — how is impossible to say — that it doesn’t give too much power to the Treasury:
. . . Taxpayers will not be left “holding the bag.” The government will buy these mortgage securities at 20 or 30 cents on the dollar and eventually sell them at higher prices.
How much higher, and how far into the future, no one knows. But even if the government doesn’t make a profit in the end, the loss will be nothing like the trillion dollars that fear mongers and doomsayers throw around. . .
As Paulson put it so plainly, Job One in this situation is to restore confidence in the financial system by unclogging a credit market that has come close to freezing up. If this can be achieved with minimal government intervention, and without investing too much power in the Treasury and Fed, so much the better.
Leave it up to Congress, however, to take a narrowly focused plan that’s been kept simple (three-and-a-half pages) and adorn it . . .
The plan before Congress is clear, transparent and minimalist. It’s been drawn up by competent and highly experienced officials who have truly risen to the occasion.
My response: The shorter the bill, the broader and more unfettered the power it grants. This bill grants too much unfocused power to people from the very industry that created the mess to begin with. It’s a recipe for more of the same. Section 8 of the proposal grants unfettered power — subject to review or oversight by no one — to the Treasury Secretary. And a bill on a subject of this complexity can hardly be “focused” in only three pages. Congress should not be browbeaten into signing off.