Wednesday, September 24, 2008

Buy Hasty Fed Bailout Now, Regret It Later

In the teeth of a previous housing recession, a real estate agent looked me dead in the eye and said: "You have to buy now. Time is running out." Not true. It took a little longer, but my wife and I ended up buying the right house, although not from that agent.
Building a false sense of urgency is a bad salesperson's favorite tactic. It's the "get it now, while they last" theory of business and those who fall for it usually get burned.
That's why it's proper and just for lawmakers to take some time evaluating the proposed $700 billion federal economic bailout plan now being pitched to Congress. The plan's backers--President Bush, Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke--don't like waiting around and are pressing lawmakers to just shut up and sign on the dotted line.
Those three gents are right about one thing: We're in a real economic jam. But any dope can see that now. And I guarantee it will get worse if investor confidence is not restored to the market, so lenders can start making good loans again.
But pushing ahead without any significant effort to vet this plan is absurd and a sure-fire recipe for compounding our fiscal disaster.
Congress must question this bill and press for more safeguards.Have you read this thing? Basically it's like Paulson is declaring Martial law over the U.S. economy. No court can stop him. No lawmaker dare question the Treasury Secretary's rulings.
Most maddening wasPaulson's initial refusal to give on the issue of capping CEO pay. At this dire point in time, why does he care? Under pressure from Congress and angry taxpayers, Paulson caved on the compensation issue, which should help move the bailout process along.
We need to construct a systemic approach to solving this problem. What Paulson and Bernanke are rightly trying to do is cook up a structure to handle this enormous, often amorphous, problem of bad credit securities and loans.
But they don't have the right to do it without any accountability. I mean, isn't the lack of checks and balances how we got into this whole subprime lending and credit crunch mess?
Earlier this week, a longtime Wall Street trader went on CNBC and dismissed opposition to the bailout as just another Democratic Party conspiracy. He said if the Dems were going to hang ornaments, like CEO compensation and oversight, on this bill that investor confidence will be lost.
You see, the Wall Street guys still don't get it.
They're worried about losing investor confidence when they should be more concerned about the lack of confidence the American people have in them and this proposed solution.
Soon enough, a bailout plan will be passed. Taxpayers will be on the hook. The economy will suffer. We're screwed. And it's damn unfair.
So members of Congress, take some time and try to get it right. After all, that may be the best investment this country can make right now.


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