Gee, I hope Tim Geithner is a nice guy...

Because he just threw out the rule of law:

It would give the Treasury the power to restructure troubled companies to avoid economy-wide risks that would fall from either a bankruptcy or taxpayer-funded bailout. The government would either seize the company in a conservatorship, which would keep the company going while it is restructured, or in a receivership, which would break up the company and sell its assets.

Unlike in a bankruptcy that gives precedence to creditors, the Treasury plan would allow the government to unwind the company in the best interests of the economy as a whole.

If the government took control of a financial company, existing shareholders, management and creditors could lose everything. Existing contracts could be renegotiated or repudiated.

"Had the government possessed the authorities contained in the proposed legislation, it could have resolved AIG in an orderly manner that shared losses among equity and debt holders in a way that maintained confidence in the institution's ability to fulfill its obligations to insurance policyholders and other systemically important customers [my emphasis]," the Treasury said.

Who needs the courts when Tim Geithner and his pals can figure it out. Right. I'm afraid "systemically important customers" will mean those who lobby and bribe the most, which actually isn't too far from the way it was.

Read the rest here.