Blowback on the Treasury..

We are really in uncharted waters in terms of reacting to the conflagration that is running through our economy and the markets, and the great fear is that opinions will swing wildly one way or t'other. Digby, who's writing I enjoy, has been at the far end of the reaction to the bailout efforts of the Treasury, basically getting the pitchforks out and lighting the torches.

I think at this point, stripping Henry Paulson of his authority to spend more cash, with Ben Bernanke thrown in for good measure, isn't an option but a duty. And Chuck Grassley's call for the newly minted oversight board to investigate conflicts of interest among all the Goldman Sachs execs serving as the ladlers of corporate cash during the bailout is absolutely warranted. However, this oversight is coming at the END of the process, not the beginning. With four trillion already passed out, it's not like putting the brakes on the giveaways is going to make much of a difference today. This is not to say we shouldn't be investigating and scrutinizing what amounts to theft, as well as building a new regulatory structure for the future (yes, listen to Eliot Spitzer on this one - setting aside his personal life he's probably the most knowledgeable person in America about what needs to be done).

I don't share the abject fear of the Goldman-led cabal that is wildly flailing about, throwing our money at the problem in any and every way that they can come up with. But I do understand the suspicion, the cynicism, and the outrage that Digby shows. In my estimation, the systemic problem facing us, the painful de-leveraging of the economy itself, is truly unprecedented, and like the 1930s requires creative and disruptive ideas and approaches. Those are by nature unsettling and scary.

What I do fault Paulson and the Treasury on is their incredible tin ear as it pertains to the process. His immediate response, in which he said: "give me the 700 billion and don't ask any questions" was an obvious non-starter in a politicized environment. His refusal to move quickly away from the flawed idea of repurchasing troubled assets from the banks rather than investing directly into the institutions themselves looked bad as well. But the appointment of Neil Kashkari really sealed his doom, I think. He could have picked from any number of smart and competent candidates to head up the TARP program, and in fact, Kashkari may be the smartest and most competent candidate. But he is 35 and he's from Goldman, and that wasn't going to play in DC.

Paulson lame ducked himself, and the fallout is ugly. He gave his opponents all the ammunition that they needed to paint him as a Wall Street guy taking care of his Wall Street buddies. He's exiting, stage left, but can't do it soon enough.