Bailout?

I will readily admit that economics is not one of my strong areas.  My coursework on that subject was limited to half a year in high school and two semesters in college.  I have been trying to wrap my mind around the proposed bailout and other types of interventions.  While I am generally against too many regulations, I also don't believe that the market will just correct itself.  My middle of the road stance will allow some regulation with the probably naive belief that regulation should be minimal, fair, and do what it is proposed to do.

I know that some kind of intervention in our current economic crisis is necessary.  Unfortunately, the more I read about what is proposed, the more I am getting nervous.  This article, from the Volokh Conspiracy didn't alleviate any of those concerns.  Some of the proposed measures by Dodd just don't sit well with me.  From the article:

I have read Dodd’s proposed statute and in some respects, it is far worse than has been reported. Senator Dodd has placed a loophole in the bill that is explicitly designed to siphon off tens or hundreds of billions of dollars to the Housing Trust Fund and the Capital Magnet Fund even if there are no net profits in the $700 billion venture.

and,

With a net loss, one might think that nothing would be funneled to the housing funds for service organizations, but that is not what the statute says or means. One looks only at the sales generating gains to determine the size of the payments to the housing funds. With $2 trillion in profits and $2.1 trillion in losses, the housing funds nonetheless get $400 billion dollars in “profits.” (This is over 40% of a typical year’s US total federal income tax receipts.) And that is the result if only 20% of "profits" are skimmed; the statute puts no upper limit on the skimming, so long as they come from profits (not net profits). Theoretically, the new Agency could potentially siphon off $2 trillion to the two housing funds, more than its $700 billion portfolio limit.

What?!?  I know that some of this is speculation, but the fact that Congress created the environment for the current financial crisis doesn't exactly give me much confidence.  The author concludes with:

I was mildly in favor of the bailout until I read Dodd's proposed statute. The way that the statute is drafted is so tricky and its definition of profit is so unsophisticated and nonsensical that the statute smells more of graft than of an honest attempt to solve the financial crisis.

It sure looks that way to me.