Argument: $700b bailout gives Treasury blank check

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Nomi Prins. “The $700 Billion Bailout Plan’s Fine Print”. 24 Sept. 2008 – “Treasury Sec. Hank Paulson’s $700 billion bailout plan now has a name: the Troubled Asset Relief Program, or TARP. But even as Capitol Hill debates TARP, few seem to have noticed the proposal item that puts taxpayers on the hook for future bailouts. It’s in Section 6, and the key phrase is this: ‘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.’

What does “at any one time” actually mean to economists? It means that if everything we American taxpayers buy re-evaluates down to zero, we get to buy more. That’s hardly taxpayer ‘protection.’ With several hundred billion dollars of write-downs already announced this year by the part of the industry compelled to post their losses, it’s a safe bet that $700 billion worth of the junkiest assets in existence will be heading to zero the second they are purchased.”