Friday Sept 26, 2008 8:30 ET,
In a stunning turn of events, this morning Henry Paulson who nine days ago requested extraordinary powers to single handedly purchase 700 billion dollars of unsaleable securities has resigned his position as Secretary of the Treasury.
Hours latter, Warren Buffet's nomination to this position was presented to the Senate by the President. The confirmation vote is to be held after limited debate this afternoon. This vote is to be taken immediately after the vote on a bill that replaces the one that Paulson presented last Thursday. It is conceptually different, as it sets up what will be called the "National Financial Reconstruction Board," modeled on a private investment bank with the taxpayers in the position of shareholders.
These events, while unprecedented in modern American history, were made almost inevitable by the choice presented to Congress members, either they vote for a bill that is universally abhorred by their constituents, possibly ending their political careers, or be responsible for an all but inevitable downturn in the economy, perhaps of catastrophic proportions.
As the possibility of this new approach encompassed in the current bill emerged, it was embraced almost completely by Congress, including the two Senators, one of whom will be President in a few months. This lead to this joint statement released yesterday evening.
To the American People.
This is an extraordinary moment in the economic life of this country. While we have many differences in policies that we will continue to debate, our concern for the economic health of this country is not one of them.
We therefore have come to conclusion that the current Secretary of Treasury, given his own personal orientation is not the appropriate individual to guide the nation through the rocky road ahead. At the request of both of us, the eminent financier Warren Buffet has agreed to accept this position, and we have both agreed to continue his services during the first term of office of whomever is elected, subject to our constitutional responsibilities.
We also both endorse the Bill, S.451, that is currently in the final stages of being drafted.
Senator Barack Obama, Senator John McCain.
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While the above is in the world of fantasy, it is more than possible and, in my opinion, strongly to be desired. A replacement the Paulson bill was suggested to Ben Bernanke at todays hearing by Sen. Jeff Bingaman, D. of New Mexico shown in this ad hoc video: (still being processed by YouTube)
If you note towards the end, Bernanke was not only open to this, he seemed to like it. He said this was another approach that should be suggested to the treasury, but he didn't know the political ramifications.
Well, the political ramifications of having Henry Paulson, a full member of the high risk culture of finance that brought us to this precipice, ranges from rejection to steaming outrage. It is political death for anyone, Republican or Democrat, who votes for it, no matter how many ads they can fund with campaign contributions from Wall Street Firms.
This is a moment of decision for this country. It should not just be a bailout to continue the illusions of prosperity for all being "just around the corner." To the degree that both parties have long promoted the "establishment" at this time the ability to transcend differences, to actually reach across the aisle would be the greatest gift they could give the American People.
Warren Buffett has thrived by refuting the gambling mentality that has defined Goldman Sachs, Lehman and untold Hedge Funds who have perverted our financial system for their own profit, and brought our country to this perilous place.
And George W. Bush offers Henry Paulson, a prince of the world of reckless finance, to do what--keep it going another year or so. I would love to see this as the actual headline this week. Not only is it possible, it would be the happiest news this country has gotten in a long long time.