Rod Dreher over at the Crunchy Con blog has had some excellent commentary, and has summarized many of my own thoughts.
Donald Luskin is up with a piece today at NRO that really nails the critical reasons why this is a terrible idea. In part:
Even if you grant that this really is a “crisis,” and that it justifies an extraordinary intervention, there can be no doubt that the $700 billion authority being sought for the purchase of distressed mortgage-related securities is far too great an amount. Of the $1.26 trillion in non-prime mortgages — that is, “sub-prime” and “Alt-A” mortgages — $743 billion is already either owned or guaranteed by Fannie Mae and Freddie Mac, companies that were shored up by a government rescue earlier this month. That leaves $521 billion, which means the Treasury’s $700 billion would be more than enough to buy them all. And that’s even if the Treasury paid full value. In fact, the Treasury will get a steep discount, considering that many of the mortgages in question are in delinquency or default. Does the Treasury really have to buy every single non-prime mortgage — even the healthy ones — twice over?
And if the Treasury’s authority were scaled down to something more in proportion to the size of the asset market it claims to address — say $350 billion — must that authority be granted all those dollars at once? Couldn’t we start with $100 billion and see how it goes, and go back later for more if necessary?
In order to restore confidence in these shaky markets, there’s no doubt the administration would claim that its commitment must be both large and irrevocable. But considering the enormous powers being vested in the discretion of a single unelected official — the Treasury secretary — markets may also find solace in the idea that there will be an accountable process for learning from mistakes and making appropriate corrections.
I should note that Luskin goes on to discuss some mitigating reasons that could justify the bailout, and he does say that he's currently leaning toward supporting it --- just that he wishes it was smaller. I agree that some action needs to be taken to address liquidity in the financial markets, but the current proposal's massive size and delegation of authority to the Treasury Secretary are deal-breakers for me.
I've written my congressman to express my opposition. Whatever your position, I encourage you to let your own representative know what you think. You can follow this link to do so.