Treasury Would Emerge With Vast New Power through Use of "Bailout"

Under the bill, the Treasury is to buy the securities at prices he deems appropriate. Mr. Paulson may set prices through auctions but is not required to do so.

Rarely if ever has one man had such broad authority to spend government money as he sees fit, with no rules requiring him to seek out the lowest possible price for assets being purchased.

The secretary is supposed to do what he can to maximize the profit or minimize the eventual loss to the federal government as a result of its purchase of mortgages and other financial instruments. But in the case of mortgages controlled by the government, he is required to approve “reasonable requests for loss mitigation measures, including term extensions, rate reductions, principal write-downs” and other possible changes. Such requests could help homeowners at the expense of the government.