Proposed Bail Out Bill

The New York Times has posted a draft copy of the U.S. Treasury bail out bill.

As a practical matter, this bill gives the U.S. Secretary of the Treasury - the former chairman of one of the Wall Street firms most instrumental in creating the current financial “problem” (or opportunity, depending on whose team you are on) - the power to spend or donate $700 billion in whatever manner he chooses and to pay whomever he wants as much as he wants on whatever terms and conditions he wants to help him do so and give them access to any information he wants. Those who help are free to use that information without liability for any responsibilities related to governmental access.


As a subtext, watch what happens as investment banks with losing derivatives portfolios merge with banks that have deposits covered by FDIC insurance. Small savers are funding a second bailout behind the scenes, confident they are protected by deposit insurance. Small investors too. On Friday, while the large players could execute trades to cover their short positions following the ban on short selling of financial stocks, small investors were frozen out of the system. The explanation was a backlog of trades from the day before.

We are republishing the language here in its entirety. I have boldfaced Section 8 as I want to make sure you seriously contemplate it’s meaning.
LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

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