Christy points us to this in the New York Times. Here is more proof, if any were needed, that Treasury is flailing. In an earlier diary, I pointed out that the Treasury had the authority to enact all kinds of regulations to enforce the bailout bill. They have started complying with the requirement that they enact regulations, and posted them on-line, here. If there were some kind of plan, we would see it in the regulations or the minutes of the meetings. But, there are no rules governing the transactions, and the minutes do not explain the process or the rationale or the legal justification.

The one thing the Country cares about is compensation. There is a rule on executive compensation, but it adds nothing to the statutory limits; it merely elaborates on them, providing details about the law. It certainly doesn’t limit any payments to anyone beyond the minimal requirements of the law. It certainly doesn’t really impose any limits on the compensation of Vikram Pandit, the CEO of Citigroup.

On his watch, Citigroup, hobbled by bad investments, grabbed not one but two financial lifelines from the government. Its share price plummeted about 80 percent. (In fairness, he took the reins of the firm less than a year ago.)
…
The trick, of course, is to dole out enough rewards to keep executives working, and working hard, but not to dole out too much. By most standards, Mr. Pandit is rich already: he made $800 million by selling his hedge fund to Citigroup (he later shuttered it).

That last sentence is really telling: Citi appointed Pandit CEO; as part of the deal, Citi bought his hedge fund, and then Citi had to shut it down. It isn’t clear that Pandit got $800 million; this article says:

Last summer, Citigroup acquired Pandit’s hedge fund for $800 million and brought Pandit – who had worked for decades at Morgan Stanley before starting Old Lane – on staff as a result. Pandit received $165.2 million, on a pretax basis, for the sale of Old Lane, $100 million of which he invested, after tax, back into Old Lane, according to regulatory filings.

Well, he’s rich anyway, and it looks like the Treasury has no intention of reining in his compensation.

And in other areas where there are no rules, how about the Capital Purchase Program, the part where we spend billions of dollars buying preferred stock from any bank that wants to sell us some. There’s nothing about controlling the process, except some general statements in its Second Tranche Report to the effect that the same terms are available to all comers. And, there aren’t any rules to explain how we are going to buy troubled assets, if we ever get around to doing that. And there aren’t any rules about protecting individuals with home mortgages. Pretty much all there is are odds and ends of other stuff, a couple of pieces of tax guidance and rules.

They also put up the Minutes of the Financial Stability Oversight Board Meeting of October 22, 2008. We learn that Treasury briefed the group on some of the programs, including the part where we spent several hundred billion buying preferred stock, without, as noted above, so much as a rule. You’ll be delighted to know, however, that the Treasury explained that this will bring financial stability and increase the flow of funds to businesses and consumers. Sad to say, there is no explanation as to why, and, as we know, it hasn’t worked out so well.

Then we get this:

A discussion occurred concerning potential ways for the U.S. government to assist at risk mortgage borrowers and reduce avoidable foreclosures. Ms. Bair described one method under which the U.S. government could encourage the modification of troubled mortgages modeled on a loan modification process currently being employed by the FDIC at IndyMac Bancorp. A discussion ensued concerning the details of that process, including the manner in which loans would be modified, the criteria used in assessing borrower eligibility, the potential costs of such a program under differing assumptions, and methods of controlling such costs. Members and others also discussed the current obstacles to private-sector loan modifications, the importance of targeting government assistance towards loan modifications that otherwise would not be made by servicers or investors, and the potential to use asset purchases by TARP to speed price discovery and aid troubled markets.

Members concurred that it was important for the government to help reduce avoidable foreclosures and to analyze alternatives to identify the best and most effective ways for doing so. Mr. Paulson and Ms. Bair indicated that the Administration had a process underway to review and consider potential policies for preventing avoidable foreclosures and that the Treasury and the FDIC were working through this process. Mr. Preston also stated that the Department of Housing and Urban Development was hosting an interagency forum later in the day to identify and coordinate methods for helping at-risk borrowers.

So, once again, no rules, only process. Oh, and a forum! And billions of dollars for banks, and billions of words for homeowners.