Treasury proposal has no oversight at all

As Congress prepares to consider a Bush proposal to establish a $700 billion fund for purchasing toxic mortgage assets, there is one part of that proposal that is profoundly disturbing even if one accepts the idea that the government should be spending hundreds of billions of dollars we don’t have to rescue struggling companies: the total lack of oversight and accountability.

The Treasury Department’s proposed legislation includes this 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.

In other words, neither Congress nor the courts have any oversight authority whatsoever as the Bush administration negotiates agreements with a number of huge corporations, most of whom have contributed enormous amounts of money to the president’s campaigns over the years. This is sheer madness. Jack Balkin, a Yale law professor, hits the nail on the head:

Oversight and regulations of public contracts are designed to prevent malfeasance, corruption, self-dealing and conflicts of interest in the distribution of federal monies. (Here is a brief history of the Bush Administration’s sorry legacy of squandering taxpayer money.) The Administration wishes to dispense with all of these restraints and precautions, just as it sought to run the Iraq war on no-bid contracts. That was bad enough, but here the dangers of bad deals and conflicts of interest are staggering. The Secretary is asking for authority to bail out Wall Street and enter into negotiations with financiers who include important parts of the political and financial base of the Republican Party. Not only will the Secretary be figuring out appropriate compensation for these people, he will also to a certain extent be deputizing a number of them to carry out a wide range of functions for the government.

Put differently, the Administration wants the Secretary to take over a sizable chunk of the nation’s capital and insurance markets, and run them as a firm. It is a merger of public power and private capital that would have made a 1930s advocate of state corporatism proud. And because the Secretary’s power is effectively unreviewable, he can make sweetheart deals with any or all of the firms and financiers that got us into this mess, providing handsome compensation packages to outgoing executives or, in the alternative, bring these failures into the government to run the new grand public/private business enterprise.

As the Secretary collects and sells off properties and debts, he alone determines who will be the beneficiaries of these sales, under what terms and conditions, and how the profits accruing from these sales will be distributed. In essence, the government will be buying assets from a group of people (many of whom caused or contributed to the crisis in the first place) that will then administer these assets for the government and then sell them back to the same group of people and/or their business associates. The possibilities for malfeasance, incompetence, corruption and conflict of interest are virtually endless.

I certainly hope the Democrats in Congress show a spine and stand up to yet another attempt by the Bush administration to wield power without accountability to those whose money they are spending and in whose name they are acting. Given the total collapse of the Democrats when faced with the FISA bill and the Military Commissions Act, that hope is likely to be dashed.