The New York Times’ Floyd Norris reports that if the current bailout proposal passes Congress, Treasury Sec. Henry Paulson can spend his $700 billion on either mortgages or mortgage-backed security or any financial instrument that isn’t a mortgage or mortage-backed security. In other words, he can spend it on anything! Norris writes: "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 bill does require Paulson "to do what he can to maximize the profit and minimize the eventual loss to the federal government." That’s sure a relief that the bill suggests Paulson spend the money wisely!

Snark aside, Norris’s article is really good at making the point that when Paulson gave Congress his plan a week ago, lawmakers balked and held hearings excoriating the Treasury Secretary. But instead of curtailing Paulson’s powers in a meaningful way, they’ve added layers of oversight to monitor Paulson’s activities. Special oversight is helping in illuminating a situation, as evidenced by Stuart Bowen, the ace special inspector general for Iraq. But it can also have almost zero impact on policy changes, as evidenced, again, by Bowen.

Paulson, of course, probably has only three months left in office, unless the next president re-appoints him. If the bill passes as is, the $700 billion will be spent by Dec. 31, 2009. Will he try to spend it all at once?-MB

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