The Bush Administration's response to the current financial crisis has not only been inept, it is blinded by ideology and prone to failure. Wake up America!
President Bush's most memorable comment about about the current financial crisis is "Wall Street got drunk." Since then any statement or activity resembling leadership has been sorely lacking. Treasury Secretary Paulson's initial foray into a rescue bailout was to propose that he have unsupervised authority to use taxpayer money to buy the financial community"s toxic assets, a scheme so fraught with self-serving outcomes and fiscal uncertainty and danger, that it got no public traction at all. Any dolt searching the internet back then could easily have learned about Sweden and Norway's sophisticated and relatively inexpensive response to a similar banking crisis back in the 1990s. It took similar actions by England's Gordon Brown to embarrass our public financial sophisticates to pursue the more rational approach of providing funds to banks and other financial institutions in return for equity. Nonetheless, our government officials, true to and blinded by their ideology, neither asked for nor received any fiduciary oversight over what these institutions might do with public moneys or to implement public policy. At the same time simple preliminary relief for the plight of ordinary citizens, such as extending unemployment benefits or allowing bankruptcy courts to restructure mortgages were over ruled. The idea that state and local governments might need assistance seems not have even been considered. Thus it remains uncertain whether we have even started down a road that might resolve the crisis.
Meanwhile in a period when the Presidential election has captured the public's attention there have been some very bizarre personnel appointments which should raise public alarm. First, a Mr. Michael Alix who was the former chief risk officer at Bear Sterns while it was heading toward bankruptcy in March leading to its take over by JPMorgan, has been hired to be senior vice president in the bank supervision group of the Federal Reserve Bank of New York. In his new job he will be overseeing the financial safety and soundness of banks which are inspected by the Federal Reserve. Give me a break! Where is the Congressional and public outcry?
Secondly, Secretary Paulson has appointed a committee of five men lead by Mr. Neel Kashkari which will be in charge of allocating the billions of dollars of capital infusions for the banking system. We should question the appropriateness of Mr. Phillip Swagel's appointment to this group as Assistant Secretary of the Treasury for Economic Policy. For a year and a half he was a Resident Scholar at the American Enterprise Institute, the well known think tank that thought out and promoted the Iraq War so well and which is the intellectual home for the ideology of market fundamentalism. A quick trip to the AEI website finds an article co-written by Mr. Swagel supporting the use of private investment accounts for social security, depending of course on the unending accrual of value of stock investments. It seems to me that the very fact that he formerly held the position of Chief of Staff to the White Council of Economic Advisers - a group which both missed the coming debacle and supported the deregulatory liberation of greed - should disqualify him from his new position of such awesome discretionary authority. Where is the criticism? Where is the outrage?