There are legions of senators and representatives back home campaigning for re-election this week who are beginning to hear from constituents that have read the 442-page monster of an emergency Wall Street bailout bill Congress approved last week. It is becoming clear that once again, our representatives voted blindly and in a rush on a massive tome of a bill, and thus endorsed some embarrassing provisions that will inflict serious harm on constitutional liberty and the national economy if they aren’t soon repealed.
There will undoubtedly be more such discoveries, but for now consider just these two. First, Section 109 of the bailout law grants the Secretary of the Treasury the authority to negate private mortgage contracts that were lawfully entered into by all parties. This “foreclosure mortgage mitigation” authority includes ordering “term extensions, rate reductions, principal write downs, increases in the proportion of loans within a trust or other structure allowed to be modified, or removal of other limitation on modification.” Section 110 of the law gives similar authority to other federal agencies. In other words, because a comparatively few buyers signed onto mortgages they didn’t fully understand, federal bureaucrats have been given the power to rewrite certain kinds of mortgages. Sure, the power is qualified now, but it won’t be long before bureaucrats discover millions more mortgages they think ought to be changed. Then it will be auto loans, home improvement loans, corporate expansion financing and so on and so on.
Second, Section 111 grants the Treasury Secretary authority to establish “appropriate standards” for executive compensation for companies receiving bailout assistance. So, because of the actions of a comparatively few thoughtless, greedy executives at AIG and Lehman Brothers, one high-ranking government executive – and his staff – have the authority to fix compensation rates for hordes of private sector executives, thus essentially removing boards of directors and shareholders from the process. Again, it only applies now to the five highest paid executives in a company, but soon enough the bureaucrats will cite sensational stories about perks enjoyed by the sixth executive in line to justify being given wider compensation-fixing authority. After that, it will be impossible to make an effective argument against letting bureaucrat control income generally, not just for high-ranking business executives. Does nobody in Washington remember Tricky Dicky’s wage and price controls?
The problem is that too many in Washington do remember the Nixon debacle but think they can make it work this time if only they have enough power. Congress can’t get back in session too soon to fix this monster it has created before it’s too late.
