Bailout Plan Shields Lenders From Lawsuits
So much for separation of powers. In a move that’s eerily reminiscent of the way the Bush Administration has sought unchecked power in conducting an unprovoked war, now it’s seeking unchecked power in spending $700 billion of taxpayer money to bail out the irresponsible financial institutions it previously refused to regulate. And it’s not clear that the taxpayers - or the homeowners duped into taking out subprime loans — are going to get anything substantive out of it.
In a plan that’s being widely questioned by economic experts, the president wants the Department of Treasury to use Americans’ tax money to pay premium prices for bad mortgage-backed assets from the major financial institutions in an effort to restore public confidence in them. As reported by Bloomberg, the plan will require spending as much as the combined budgets of the Departments of Defense, Education and Health and Human Services, and would give Treasury Sec. Paulson the power to hire asset managers and award contracts to private companies. While Democrats have promised there will be unspecified “oversight” of all this, the proposal to ban any legal actions against the Treasury for its handling of the crisis deliberately removes the federal courts from the oversight role that that they’re constitutionally designed for.
Despite the repeated efforts of this Administration to push them aside, the courts are, in fact, the Third Branch of government, designed to check the Executive and Congress. While some limitations on opportunistic lawsuits might be necessary to prevent any feared onslaught, preventing any court judgment of Treasury’s actions would, once again, give this Administration far more power than its management of the economy thus far would suggest that it deserves.