There must be very close supervision of the Treasury as it buys and manages assets under the financial rescue legislation signed into law by President George W. Bush on Friday. The legislation creates an oversight board that consists of the Treasury secretary, the director of the Federal Housing Finance Agency, the Federal Reserve Bank chairman, the HUD secretary, and the SEC chairman. Congress is also authorized to maintain close oversight with its own five-member oversight panel.
These overseers should pay particular attention to the quality of assets and the way they are being purchased. For $700 billion, the public deserves assets that are worth, or soon will be worth, $700 billion. How the assets are purchased—one-by-one or through an auction process—and who handles the transactions—outside firms with conflicting interests or others—may go a long way in deciding what the assets end up being worth. Keeping a close eye on the process, as well as the actual quality of the assets being purchased, will be vital to ensure that the taxpayers get their $700 billion worth.
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