H. D. Vinod Professor of Economics and Director of Fordham Institute of Ethics and Economic Policy Fordham University, Bronx, ny 10458

) Explicit Limits on Purchase /Sale Prices and Fiduciary Obligations

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2) Explicit Limits on Purchase /Sale Prices and Fiduciary Obligations.

The greatest potential for abuse of taxpayer money is possible if the persons selected by Secretary Paulson can allocate taxpayer funds to pay inflated prices for mortgage assets. A simple way to prevent this abuse is to legislate a cap. The Congress should amend Section 2(a) as follows, while still retaining Secretary Paulson's authority to decide the price at which mortgage related assets are to be bought or sold. Section 2(a) should include a provision that the purchase price should not exceed 25 percent of the fair market value as of July 2008, somewhat before the recent meltdown. On the selling side, Section 5(c) should explicitly mention that the Secretary has a fiduciary obligation to try to achieve the highest possible price for each taxpayer-owned asset.

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