Capital Markets

The Bailout and Judicial Review

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Today's big House revolt against the bailout was welcome for all sorts of reasons, though it's worth pointing out one way that today's bill was at least superior to the proposal Treasury Secretary Hank Paulson first conjured up. Here's what Paulson's original draft had to say on the matter of judicial review:

Decisions by the Secretary pursuant to the authority of this act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

So much for checks and balances! Or as the Cato Institute's William Niskanen put it, "For the second time in six years, the Bush administration has asked Congress for nearly unlimited authority without an independent professional review of the evidence that led the administration to request such authority."

Here's what today's ill-fated Emergency Economic Stabilization Act of 2008 had to say on the matter:

Actions by the Secretary pursuant to the authority of this act shall be subject to chapter 7 of title 5, United States Code, including that such final actions shall be held unlawful and set aside if found to be arbitrary, capricious, an abuse of discretion, or not in accordance with law.

Judicial review by the federal courts, in other words, which is immeasurably better than placing Paulson (or whoever replaces him) above the law. As Niskanen notes, the Bush administration has an extremely troubling record of pushing and grabbing for as much executive branch authority as it can possibly get. Former Justice Department attorney and "torture memo" author John Yoo, for instance, recently went so far as to praise the belligerent and domineering Andrew Jackson for his "vigorous exercise of his executive power."

Assuming today's crazy quilt of "no" votes eventually comes undone, let's hope that this particular improvement at least remains intact.