After Secretary Paulson released his first bailout draft, we enumerated some threshold constitutional issues that the proposed legislation failed to pass. The latest House bailout draft not only fails to address these concerns, it actually creates brand new ones.
The most glaring problem with the original proposal was the lack of meaningful standards to limit the extremely broad grant of discretion to the Treasury Secretary. The latest House draft attempts but ultimately fails to fix this problem. The draft identifies a long list of “considerations” that the Secretary “shall” consult when exercising his authority under the act. Specifically the Secretary must consider if asset purchases would:
provide stability or prevent disruption to the financial markets or banking system … help families to keep their homes and stabilize communities … ensure that as many financial institutions as possible participate in the program, without discrimination…based on their size, geographic operation.
These vague, overlapping, and contradictory “considerations” does more to expand the Secretary’s power than limit. Though the new draft does reinstate judicial review, that review is meaningless unless courts are given firm standards that actually constrain the Secretary’s discretion. The above list contains no limiting principle a court could use to determine which acts or lawful and which are not. It is a blank check of legislative power turned over to the Treasury Secretary.
Instead of doing the hard and necessary work of crafting language that could operatively limit Treasury’s power, the House draft punts that responsibility to a newly created “oversight panel” and questionably “independent” inspector general. This abdication of responsibility is a symptom of the separation of powers sloppiness of modern times. Too often Congress delegates vast new authority to the executive branch to “fix” the problem de jure and then tries to invent new ways to micromanage and nitpick the exercise of the authority. Such a power-sharing relationship is the exact opposite of the constitutional separation of powers perfected by the Framers of our Constitution.
Members of Congress may think their new oversight provisions improve the bill, when in fact they move in the wrong direction. The latest House draft does not correct the old constitutional defects, and it raises new constitutional problems. These are not mere policy preferences that can be weighed against other policy preferences. These are iron-clad constitutional mandates. If they are not fixed, no Member can vote for the bill without violating his/her constitutional oath.