I wrote this last night, and never finished it up:
You know TARP, right? No? Barring a name change, I can almost promise it will become one of the most used acronyms in American political conversation for years to come. TARP is the Troubled Asset Relief Program (i.e., the Bailout).
Good thing, because we’ve got a new name this morning: Emergency Economic Stabilization Act of 2008. While I thought that opposition to the originally proposed Paulson plan was a no-brainer, I’ve been trying to find decent analysis of the latest iteration. So far, this piece by Steven Davidoff has been one of the most forthright:
In the end, the bill is largely what Mr. Paulson wanted, with some interesting side bars. The House put in some oversight, but judicial review of the Treasury secretary’s actions is still subject to an “arbitrary and capricious†standard. Moreover, the executive compensation and the equity purchase provisions are so watered down that they are not likely to be implemented with respect to any participating company.
It’s not a terribly long or dense analysis – I urge you to read the whole thing for yourself. It ends with this:
If the bill is passed in this form, the Democrats will claim a victory through these executive and corporate governance provisions as well as the warrant provisions. But Mr. Paulson can decide how much of these warrants to take, and the executive compensation and corporate governance provisions are unlikely to be implemented for any companies. The bill is not much different than the original proposal — just 107 pages longer. Ultimately, the credit markets are frozen and we need this plan, but the authority provide the Treasury secretary and the potential scope of this program is troubling.
I’m still inclined to stand against it. Sure would like to see a convincing argument for it, though.
Update: Krugman thinks that it’s the best viable bill the current political circumstances can produce. Weak tea, indeed. (This is what thinks would be ideal, the politics of it aside.)
Update II: This post has already been copied and posted to some site with the url – troubled-asset-relief-program.net. And already, I’ve gotten traffic from J.P. Morgan as a result. Hey, people, get back to work!
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