Dodd’s Section 8: slight improvement on the original Diktat, but is it enough?
Posted by Thomas Nephew on September 25th, 2008
Paulson power grab: Sec. 8. Review (35 comments);
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.
Dodd proposal: Sec. 8. Limits on review (7 comments)
a. IN GENERAL. Any determination of the Secretary with regard to any particular troubled asset pursuant to this Act shall be final, and shall not be set aside unless such determination is found to be arbitrary, capricious, an abuse of discretion, or not in accordance with the law.
b. EXCEPTION. Notwithstanding subsection (a), the terms of a residential mortgage loan that is part of any purchase by the Secretary under this Act shall remain subject to all claims and defenses that would otherwise apply notwithstanding the exercise of authority by the Secretary or the Corporation under this Act.
Via the very interesting PublicMarkup.org project of the Sunlight Foundation. As the headings indicate, the proposed legislation is broken up into sections and opened up to comment by participants. While the heat-to-light ratio is high, there is some good discussion amid the invective — and the sheer amount of invective is yet another clue, if any further ones were needed, that this has touched a nerve. 
(In that regard, the facebook page “No Blank Check for Wall Street” is growing steadily, and an allied WetPaint Wiki site is underway as well.)
Among the potentially useful comments at PublicMarkup.Org about Dodd’s counterproposal:
c. RETROACTIVE IMMUNITY Nothing in this act may be construed as providing retro-active immunity for illegal acts by financial institutions whose assets were purchased under Title I, Clause 2, or their subsidiaries, or their employees, contractors, board members, and other associated parties.
posted by lambert strether (Corrente) at September 22, 2008 [...]I IMPLORE Senator Dodd to look into HOLC, the New Deal approach to an equivalent problem, which left people in their homes, cleaned up the bank’s balance sheets, and made the government a profit by the time it closed down.
posted by lambert strether (Corrente) at September 22, 2008 [...]
The thing which is missing for me is review of the mortgages that are failing for fraudulent origination or just plain excessively permissive underwriting. It seems to me that there should be different treatment for mortgagees and mortgage originators where the mortgage was fraudulent. The act should specify three tiers: fraudulent, excessively permissive, other bad loans. The inspector general should be able to review the loans and make the determinations, and the IRS should help by providing tax return information for the year of mortgage origination.
posted by Frank J at September 23, 2008
I’m no lawyer, and assume “arbitrary” or “capricious” are terms of legal art that are well defined. That said, Dodd’s Section 8a doesn’t seem like very much of a constraint to me. While other parts of Dodd’s bill require disclosures to Congress, they don’t seem to provide for Congressional co-direction or other provisions for independence from or checks on the executive branch. I think it’s going to be General Petraeus all over again if Paulson or his successor is questioned on any particular decision.
In general — though I hasten to add I’ve only skimmed it — the Dodd proposal doesn’t seem to provide equity stakes in companies receiving this kind of bailout, and it doesn’t seem to address the key “too big to fail” question that Senator Sanders raises.
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UPDATE, 9/25: Lawmakers: Wall Street rescue accord reached
NOT SO FAST, 9/25: White House Meeting Fails to Yield Bailout Deal
Category: Post. Tags: bailout, democratic party, mortgage crisis.
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September 25th, 2008 at 2:56 pm
I’m hoping to hell that the plan that goes somewhere is one that only funds bailing-out through a few months, to get into the period where the next administration is able to take charge of it. The idea of having slice-and-dice artist Paulson, recipient of an eighteen-million-dollar bonus before he was awarded the Treasury gig, be in charge of things for the next two years is just flat unacceptable — “oversight” or no.