Friday, October 3, 2008

The Bailout: The One Thing I Don’t Get

It’s early Friday morning. In hours, the House will vote on what would be a historic $700 billion bailout of Wall Street. The bill will likely pass, though it’s essentially the same as the version the House shot down on Monday. (The Senate sprinkled on some pork and tinkered with FDIC limits on deposit insurance.)

What’s puzzling is that, facing the financial crisis of a lifetime, Congress can’t manage to draft even one alternative to the lousy Hank Paulson plan at the heart of this legislation. They could’ve been working on something since Monday. They could’ve consulted the legion of economists who have burst forth brandishing better proposals. In fact, I have yet to read a worse idea than what the Treasury Secretary wants to do: Buy a slew of bad assets with taxpayer money while failing to directly recapitalize struggling banks. This seems exactly the prescription for a long, drawn-out endgame of this mess with the likelihood we’ll start chucking good money after bad.

There is a vibrant marketplace of ideas in a democracy; it is one of our greatest strengths. We have the right to debate and disagree: with each other, with our government. And during this crisis, the response in the financial blogosphere has been smart, electric, incisive. Many, many good ideas are circulating. But no one in Congress sees fit to offer even one rival bill to the deeply flawed Paulson plan.

I don’t get it.