Constitutional experts have concluded that that the $700 billion bailout bill is an unconstitutional delegation of power, in violation of constitutional separation-of-powers safeguards. I earlier reached the same conclusion in pronouncing the bill “dangerous, inflationary, unnecessary, and unconstitutional.” One of the experts calling its constitutionality into question is Civil Rights Commissioner and Heritage Foundation scholar Todd Gaziano, a separation-of-powers expert who, as a Justice Department lawyer in the Clinton and Bush administrations, “developed the argument adopted by the Supreme Court in Weiss v. United States, 510 U.S. 163 (1993) to uphold the constitutionality of judges detailed to hear cases in the military court system.” Gaziano and Andrew Grossman argue that the bill is likely unconstitutional because it lacks meaningful standards and bars judicial review.
As we noted earlier, the bailout may risk creating future bubbles, and it ignores less costly ways of rescuing financial markets, like the RSC plan, and fails to consider reforms of burdensome regulations that might reduce the need for a bailout. Why should we trust government officials with $700 billion to buy up bad loans, without any clear standards, given that government incompetence and regulations (like affordable housing mandates) helped spawn the crisis? Many economists oppose it.
CEI has been warning of the need for reform of mortgage giants Fannie Mae and Freddie Mac for years, as Michelle Malkin noted back in 2004, but Congress turned a deaf ear to our pleas, and taxpayers are now paying the price.