"The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time."
This statement is taken directly from Henry Paulson's original proposal. Whether it survives the bipartisan consensus I cannot predict, but it is a scary, scary authority.
Keep in mind that Secretary Paulson and Fed chairman Bernanke have already testified under oath that they intend to drastically overpay the banks for their "troubled assets."
One may me tempted to focus on the $700,000,000,000, but the real devil lies in the words "outstanding at any one time."
If this provision passes, Paulson will have the freedom to allocate much more than $700 billion of our money to this so-called crisis. For example, he could buy $100 billion of assets from Goldman Sachs, then sell it to Morgan Stanley for $5 billion. He could buy $700 billion of assets, then write the value down close to 0, then buy another $700 billion. He could even continue a buy high - sell low scheme infinitely or until he judges that banks are "adequately capitalized."
Would Henry Paulson abuse this power in such a way? I don't know. But he would be able to do it . And let us not be naive. There is a reason behind Paulson's inclusion of this other provision in his proposal:
"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."