The Great Recession - post mortem

[JPhillips]

This is what I'm talking about. From the WSJ:

House Republican staffers met with roughly 15 lobbyists Friday afternoon, whose message to lawmakers was clear: Don't load the legislation up with provisions not directly related to the crisis, or regulatory measures the industry has long opposed.

"We're opposed to adding provisions that will affect [or] undermine the deal substantively," said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, whose members include the nation's largest banks, securities firms and insurers.

A deal killer for the group: a proposal that would grant bankruptcy judges new powers to lower the principal, interest rate or both on a mortgage as part of a bankruptcy proceeding.

[Marc Vaughan]

Originally Posted by JPhillips

Giving Paulson 700 billion with no oversight and no recourse if things go badly is not what I would like our government to do.

You make it sound like he's drawing this up by himself and likely to sneak in a small clause which puts a few billion in his back pocket

He's the figure head for sure but I'd almost guarentee there will be a LOT of people working on this to ensure its as safe and sensible as possible.

[Marc Vaughan]

Originally Posted by JPhillips

This is what I'm talking about. From the WSJ:

Out of interest in America do bankruptcy judges have the power to mitigate any other forms of debt? (ie. would this be out of the ordinary or are mortgages presently handled differently to other debts?).

[Galaxy]

Originally Posted by JPhillips

A deal killer for the group: a proposal that would grant bankruptcy judges new powers to lower the principal, interest rate or both on a mortgage as part of a bankruptcy proceeding.

That's a tough position, I think. What about consumers who are responsible enough to be able to pay their mortgages and those people are responsible enough to have good credit scores (paying their bills on time, which means better rates). A lot them are already pissed that the government is putting forward this bailout plan. However, the people who are in trouble are now in a position to go the bank and work out a plan, if they really wanted to. I'm not saying they'll get 1% to 2% interest rates, but they banks do not want these homes, so the borrowers have some leverage.

[JPhillips]

Originally Posted by Marc Vaughan

Out of interest in America do bankruptcy judges have the power to mitigate any other forms of debt? (ie. would this be out of the ordinary or are mortgages presently handled differently to other debts?).

I think this was something that was changed during the last bankruptcy bill.

[JPhillips]

Originally Posted by Galaxy

That's a tough position, I think. What about consumers who are responsible enough to be able to pay their mortgages and those people are responsible enough to have good credit scores (paying their bills on time, which means better rates). A lot them are already pissed that the government is putting forward this bailout plan. However, the people who are in trouble are now in a position to go the bank and work out a plan, if they really wanted to. I'm not saying they'll get 1% to 2% interest rates, but they banks do not want these homes, so the borrowers have some leverage.

I guess I just see this a lot like the parable of the talents.

[Galaxy]

Paulson urges quick action on $700 billion bailout: Associated Press Business News - MSN Money

Looks like Dems want more control to be inserted into the bill (which I agree with-depending on what exactly it is).

[JPhillips]

Oh hell no.

The financial crisis that began in the United States spread to many corners of the globe. Now, the American bailout looks as if it is going global, too, a move that could raise its cost and intensify scrutiny by Congress and critics.

Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.

[Flasch186]

wow

[Flasch186]

welp, as of tonight we have no more 'major' investment banks as GS and MS change their status to become depositary banks as well.

[cartman]

Originally Posted by JPhillips

Oh hell no.

One of the biggest beneficiaries of this is going to be UBS. Take a guess as to who is the vice chairman of UBS's US operations, and a registered lobbyist on behalf of UBS. That's right, Phil Gramm. Ugh.

[path12]

I've written to both my senators and congressman against this bill. Doubt it means much, but I at least feel better for having done it.

[JPhillips]

Get your piece of the bailout!

http://www.buymyshitpile.com/

[MikeVic]

What does this "no investment banks" mean? I have money in a mutual fund that tracks the financial sector heavily... I figured I'd get in when low, and it's bound to jump back up one day (although I've lost money on it so far). Do you think this news is bad for the financial sector?

[DaddyTorgo]

i need to throw some money into a financial-sector ETF - I still think we have yet to hit bottom, but it's time for me to do my research and pick one out

[Flasch186]

XLF is one of them but there are ones that are "ultra" with more beta to them.

[DaddyTorgo]

yeah - i need to do some assesment - look at some of the metrics

I don't know that high-beta is necessarily the way to go ATM -- with the sector so depressed, even a low-beta option would likely produce favorable returns medium-term, in fact in the medium-longer run it might even be more sensible.

[sterlingice]

Originally Posted by Galaxy

Mark Cuban has an interesting view on the problem:

Stock Market Meltdowns - Why they will happen again and again and again « blog maverick

(BTW, his most recent two posts on defending Josh Howard is a good read).

He's 100% spot on about the risk and reward being decoupled if you're a CEO. The only thing that keeps these things in check are the moral restrictions of a person who's main purpose in life is to be the most powerful person in a large company. That's not a very good measure of checks and balances.

I don't know if his solutions are sound, tho. Haven't really thought about the plusses and minuses but it sounds reasonable.

SI

[sterlingice]

Originally Posted by Galaxy

I would like to see the law pass allowing shareholders to vote on CEO/High-level Executive/Board member compensation packages for public companies.

I don't think that would do much. I'm sure the prospective executive/ceo/board member would just keep asking for different packages until they got what they wanted. I just don't think the average shareholder would pay enough attention.

It's like free agency for a team desperate for a new ace pitcher- they'll overpay because they want a change.

SI

[Mizzou B-ball fan]

I'm sure some have received this via e-mail, but I thought I'd post it for those who have not. Great stuff.........

*I’m against the $85,000,000,000.00 bailout of AIG.*

Instead, I’m in favor of giving $85,000,000,000 to America in a */We Deserve It Dividend/*.

To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+.

Our population is about 301,000,000 +/- counting every man, woman and child.
So 200,000,000 might be a fair stab at adults 18 and up..

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a *We Deserve It Dividend*.

Of course, it would *NOT* be tax free. So let’s assume a tax rate of 30%.

Every individual 18+ has to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife has $595,000.00.

*What would you do with $297,500.00 to $595,000.00 in your family?*
*Pay off your mortgage – housing crisis solved.*
*Repay college loans – what a great boost to new grads*
*Put away money for college – it’ll be there*
*Save in a bank – create money to loan to entrepreneurs.*
*Buy a new car – create jobs*
*Invest in the market – capital drives growth*
*Pay for your parent’s medical insurance – health care improves*
*Enable Deadbeat Dads to come clean – or else*

*Remember this is for every adult U S Citizen 18_+ _*_including the folks_
who lost their jobs at Lehman Brothers and every other company
that is cutting back. And of course, for those serving in our Armed Forces.

If we’re going to re-distribute wealth let’s really do it...instead of trickling out
a puny $1000.00 ( “vote buy” ) economic incentive that is being proposed by one of our candidates for President.

If we’re going to do an $85 billion bailout, */let’s bail out every adult U S Citizen 18+!/*

*As for AIG – liquidate it.*
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.

*Here’s my rationale.* */We deserve it and AIG doesn’t./*

*Sure it’s a crazy idea that can “never work.”*

But can you imagine the */Coast-To-Coast Block Party/*!

How do you spell* Economic Boom?*

*I trust my fellow adult Americans to know how to use the $85 Billion*
*/We Deserve It Dividend/* more than I do the geniuses at AIG or in Washington DC .

And remember, The Birk plan only /really /costs $59.5 Billion because $25.5 Billion is returned
instantly in taxes to Uncle Sam.

/Ahhh...I feel so much better getting that off my chest./
**
Kindest personal regards,
Birk
T. J. Birkenmeier, A Creative Guy & Citizen of the Republic

[cartman]

Wow, the math in that is embarrassingly bad.

[JPhillips]

T.J Birkenmeier, A Guy that can't divide

85 billion / 200 million = 425

[Mizzou B-ball fan]

Originally Posted by JPhillips

T.J Birkenmeier, A Guy that can't divide

85 billion / 200 million = 425

I'm not sure how people can read that e-mail and still wonder why American citizens take on loans they can't afford.

[BrianD]

Originally Posted by cartman

Wow, the math in that is embarrassingly bad.

What...$425 doesn't equal $425,000? Are you sure? We could still have a nice block party with whatever is left from $425.

[Flasch186]

oil superspike today....nice timing.

[Kodos]

* He sure likes the asterisk.

[Galaxy]

Oil is fricken up around $18/Barrel today! I guess it went ever higher earlier in the day.

[Galaxy]

So, why do we allow Wall Street firms and investors to buy oil and gas that they don't even use?

[flere-imsaho]

Ask the GOP Congress that passed the bill removing those restrictions a few years ago (when they still had control of Congress).

My guess is that they have friends on Wall Street who stood to make a lot of money on speculation.

[Galaxy]

I used to be a big defender of the oil trading, but now I'm not. We're giving these companies $700 billion-$1 trillion, and now they do this shit? However, can you really stop it? Wouldn't it just push oil trading markets to another country's exchange?

[Galaxy]

Dems want pay limits, loan aid in bailout - U.S. business - MSNBC.com

[Mizzou B-ball fan]

Originally Posted by Galaxy

Dems want pay limits, loan aid in bailout - U.S. business - MSNBC.com

I'm not too opposed to the proposals that Dodd put forward. My only problem is that this is the same man that let all of this crap happen under his watch as chairman. It may not have started under his watch, but he has had two years to put some band-aids on it and did nothing but accept lobby money to do just the opposite.

[Flasch186]

oh and new gov't guidelines on buying a new home, ready:

If you have an old home and planned on getting a renter for the old home you cant use that $ as income even if it covers the mortgage and then some. That is unless you have 75% LTV in the home. I get the idea behind it but talk about too little too late and actually now making things harder! Such a horrible implementation of tightening.

[Surtt]

Originally Posted by Galaxy

I used to be a big defender of the oil trading, but now I'm not. We're giving these companies $700 billion-$1 trillion, and now they do this shit? However, can you really stop it? Wouldn't it just push oil trading markets to another country's exchange?

Are we going to have to do another bailout when the commodities market bubble bursts?

[Passacaglia]

My God. The bad math, of course. But -- why would the money be taxed? And you'd think "A Creative Guy" could come up with some possible negative ramifications of giving out 425K to everyone in the country.

[Galaxy]

Oil is down quite a bit.

[sterlingice]

They were talking on NPR last night that yesterday's prices were arbitrarily high. Something about contracts being due for October crude and some traders getting caught trying to get lower prices and having to fill contracts. However, November prices were down around $110 like they are today.

SI

[flere-imsaho]

I'm still not convinced by the calls to regulate CEO pay. I think CEO pay is often very out of line with the actual return the CEO provides the corporation, but regulating pay seems to me to be regulation "just to make people feel better."

If we're going to go that route, I'd rather see some regulation around this cross-pollenation of boards & CEOs (where CEO X sits on the board of CEO Y and vice versa). That's a situation ripe for abuse.

[Galaxy]

Originally Posted by flere-imsaho

I'm still not convinced by the calls to regulate CEO pay. I think CEO pay is often very out of line with the actual return the CEO provides the corporation, but regulating pay seems to me to be regulation "just to make people feel better."

If we're going to go that route, I'd rather see some regulation around this cross-pollenation of boards & CEOs (where CEO X sits on the board of CEO Y and vice versa). That's a situation ripe for abuse.

What exactly are the details in how they will regulate pay? I don't mind allowing shareholders to vote on executive compensation packages. We need to move from a short-term to a long-term focus.

[Fidatelo]

The CEO pay thing is tough. I don't mind them getting paid oodles of money if they are truly great at what they do, and they are steering the company in the right direction for both short-term and long-term health.

The problem is, you can only really judge their performance in hind-sight. So do you withhold a bunch of pay until 5 years after they leave? If so, how the heck does that work? Or do you make them take a bunch of stock options that can only be sold several years after they leave? But then how is that fair if they do a great job but their successor screws it all up, or any number of outside factors mess up the share price down the road?

It's so easy to say that we need to incent them to think long-term, but, outside of somehow instilling morals in people, I don't know how you actually do it.

[Anthony]

you do not, i repeat, do not want shareholders to vote for CEO's pay. s/h's, and i deal with shareholders for a living in my company, are concerned with increases in share price (i know, duh!, far out concept). s/h's are among the most fickle groups known to man. you'll basically have CEO's having to generate massive amounts of gains to appease the s/h's. you know short term gains, its that thinking that got us into trouble in the first place.

no, you first need to have a cap on CEO payouts, and you secondly need to have it based on the avg's of several years. anything else is basically putting the company back in the same place it was before.

ok, bye.

[DanGarion]

I got this from Paulson via email today.

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to [email protected] so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

[Galaxy]

What about changing the capital gains tax from one year to a longer time period?

[Fighter of Foo]

This is super interesting IMHO...

HTTP Error 403

Blame Urban Planning

The credit crisis has led to numerous calls for bigger government. Yet the truth is that big government not only let the crisis happen, it caused it.
This truth is obscured by most accounts of the crisis. “I have a four-step view of the financial crisis,” says Paul Krugman. “1. The bursting of the housing bubble.”
William Kristol agrees. His account of the crisis begins, “A huge speculative housing bubble has collapsed.” “The root of the problem lies in this housing correction,” said Secretary of the Treasury Henry Paulson.
So it all started with the bubble. But what caused the bubble? The answer is clear: excessive land-use regulation. Yet while many talk about re-regulating banks and other financial firms, hardly anyone is talking about deregulating land.

The housing bubble was not universal. It almost exclusively struck states and regions that were heavily regulating land and housing. In fast-growing places with no such regulation, such as Dallas, Houston, and Raleigh, housing prices did not bubble and they are not declining today.
The key to making a housing bubble is to give cities control over development of rural areas — a step that is often called “growth-management planning.” If they have such control, they will restrict such development in the name of stopping “urban sprawl” — an imaginary problem — while their real goal is to keep development and its associated tax revenues within their borders. Once they have limited rural development, they will impose all sorts of conditions and fees on developers, often prolonging the permitting process by several years. This makes it impossible for developers to respond to increased housing demand by stepping up production.
In contrast, when cities do not have control of rural areas, developers can step outside the cities and buy land, subdivide it, and develop it as slowly or rapidly as necessary to respond to demand. The cities themselves respond by competing for development — in other words, by keeping regulation and impact fees low. The Houston metro area, for example, has been growing at 130,000 people per year, yet it was readily able to absorb another 100,000 Katrina evacuees with virtually no increase in housing prices.
Before 1960, virtually all housing in the United States was “affordable,” meaning that the median home prices in communities across the country were all about two times median-family incomes. But in the early 1960s, Hawaii and California passed laws allowing cities to regulate rural development. Oregon and Vermont followed in the 1970s. These states all experienced housing bubbles in the 1970s, with median prices reaching four times median-family incomes. Because they represented a small share of total U.S. housing, these bubbles did not cause a worldwide financial meltdown.
In the 1980s and 1990s, however, several more states passed laws mandating growth-management planning: Arizona, Connecticut, Florida, Maryland, Rhode Island, and Washington. Massachusetts cities took advantage of that state’s weak form of county government to take control of the countryside. The Denver and Minneapolis-St. Paul metro areas adopted growth-management plans even without a state mandate. As a result, by 2000, prices of nearly half the housing in the nation were bubbling to four, six, and in some places ten times median-family incomes.
In the meantime, Congress gave the Department of Housing and Urban Development (HUD) oversight authority over Fannie Mae and Freddie Mac. While this was supposedly aimed at protecting taxpayers, Congress knew that HUD’s main mission is to increase homeownership rates, and Congress specifically pressured HUD to increase homeownership among low income families. So HUD responded to the housing bubble by directing Fannie and Freddie to buy increasingly high percentages of mortgages made to low income families, eventually setting a floor of 56 percent. This led Fannie and Freddie to significantly increase their purchases of subprime mortgages, which legitimized the secondary market for such mortgages.
Though everyone knows that the deflation of the housing bubble is what caused the financial meltdown, few have associated the bubble itself with land-use regulation. Back in 2005, Paul Krugman observed that the bubble was caused by excessive land-use regulation. Yet nowhere in his current writings does he suggest that we deregulate land to prevent such bubbles from happening again. Such suggestions have come only from the Cato Institute, Heritage Foundation, and a few other think tanks.
We know that if the regulation is left in place, housing will bubble again — California and Hawaii housing has bubbled and crashed three times since the 1970s. We also know, from research by Harvard economist Edward Glaeser, that each successive bubble makes housing more unaffordable than ever before — and thus leaves the economy more vulnerable to the inevitable deflation. This is because when prices decline, they only fall about a third of their increase, relative to “normal” housing, before bottoming out.
Thus, median California housing was twice median family incomes in 1960, four times in 1980, five times in 1990, and eight times in 2006. In the next bubble, it will probably be at least ten times. This means homeownership rates will decline (as it has declined in California since 1960), small business formation (which relies on the equity in the business owners’ homes for capital) will decline, and education will decline (children of families that own their homes do better in school than children of families who rent).
Worse, more states are passing growth management laws. Tennessee passed a law in 1998, too late to get into the recent housing bubble but enough to participate in the next one. Legislators in Georgia, North Carolina, and other fast-growing states are being pressured to also pass such laws. Naturally, the planners who promote such laws deny that their actions have anything to do with housing prices.
Even worse, the Environmental Protection Agency has proposed to “integrate climate and land use” — effectively using global warming fears to impose nationwide growth management. Supposedly — though there is no evidence for it — people in denser communities emit fewer greenhouse gases, and growth management can be used to impose densities on Americans who would rather live on quarter-acre lots. The California legislature recently passed a law requiring cities to impose even tighter growth restrictions in order to reduce greenhouse gases — and its implementation will be judged on the restrictions, not on whether those restrictions actually reduce emissions.
Instead of such laws, states that have regulated their land and housing should deregulate them. Congress should treat land-use regulations as restrictions on interstate mobility, and deny federal housing and transportation funds to states that impose such rules. Otherwise, hard as it may be to imagine, the consequences of the next housing bubble will be even worse than this one.

[Surtt]

I don't but it.

The cause of the bubble was loans given out to people that could not afford them.
The loans could have been for cars boats or elephants.

[Marc Vaughan]

I don't buy that either - yes housing regulation can cause price growth, but where I live in Florida the price growth was largely because of an influx of new people to the area and the timelag involved in building houses rather than regulations preventing them being built.

The big problem was excessive credit (mortgages) being given to people who couldn't afford them - fairly simplistic imho.

The future problem may be exactly the same but related to credit cards imho (as I've seen some horrifically scarey statistics in the last 6 months on credit card balance growth in America).

[molson]

Ron Paul chimed in on CNN.com

Commentary: Bailouts will lead to rough economic ride - CNN.com

Spoiler

-- Many Americans today are asking themselves how the economy got to be in such a bad spot.

For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.

Unfortunately, the government's preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.

Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.

Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.

Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.

These governmental measures, combined with the Federal Reserve's loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.

When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.

Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.

In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.

This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners -- in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers -- builders and other sectors connected to real estate that suffer setbacks.

The government doesn't like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.

I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.

Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.

The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.

It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.

The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.

Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.

[Buccaneer]

Thanks molson, I was going to do that if you hadn't. Why the spoiler?

[molson]

Originally Posted by Buccaneer

Thanks molson, I was going to do that if you hadn't. Why the spoiler?

Just because it was so long.

[chesapeake]

Originally Posted by Marc Vaughan

You make it sound like he's drawing this up by himself and likely to sneak in a small clause which puts a few billion in his back pocket

He's the figure head for sure but I'd almost guarentee there will be a LOT of people working on this to ensure its as safe and sensible as possible.

I need to vent, here. Directly from Paulson's proposal, I insert here the entirety of Section 8:

"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."

That is it. Under the Paulson plan, he is accountable to no one. So, to your point, Marc, since his decisions are not reviewable by a court of law, and his proposal allows him to buy and sell anything he wants at any price, Paulson could buy $750 billion in mortgage-backed securities, sell it to himself for a penny, and, under this proposal, there is no legal action possible.

That said, I do not believe he intends to do that; but it is absolutely ridiculous to write a law that would give someone that ability.

The only "accountability" under Paulson's proposal is to provide a report to Congress twice a year. In that regard, the report isn't required to include any specifics. The following text would comply fully with the legal requirement for the report to Congress: "Dear Congress: I spent all $750 billion. I complied with the law and, boy, did it sure help out a lot of folks. Smooches, H. Paulson."

The language proposed by the Administration is a joke. Not that I would expect anything else from this crew.