Why Have Things Gone So Wrong?

Lack of transparency. Intellectual dishonesty. Failure to read the pulse of the nation. In my adult life I have never seen a backlash so powerful or so well-timed as this. The voting public called bull#$%& on Hank Paulson, the President, Congress, Ben Bernanke, and anyone else associated with the current proposal, right in the midst of an election year. It could have been so easy. See problem. Identify key elements of problem. Quantify magnitude of problem. Develop plan to address problem in conjunction with needs of key constituencies. Clearly and thoughtfully articulate the plan to solve the problem. Put plan on floor of Congress. Pass plan. Implement. Repeat if necessary. But this is not how it came to pass.

I have been a Paulson supporter since his appointment. But he has bungled the handling of the bailout worse than an intellectual midget. This is one circumstance where IQ points, hubris and ego served as a barrier to success. He was so convinced of his righteousness and correctness that he didn't listen. During an election year. In the midst of one of the most severe financial crises this country has ever faced. He simply missed the boat. He didn't have a read on the pulse of the country. And it cost his bill passing Congress. And perhaps his job as well.

I said it at the beginning of the crisis and I'll say it again: the voters, the people paying for the plan, need to trust its makers and need transparency for that trust to be cemented in their minds. Seems obvious. Seems fair. But this is not the way Secretary Paulson or his pals read the situation. They wanted supreme powers. They wanted to avoid judicial review. They wanted to steer clear of compensation caps. They couldn't have been more wrong, either on the issues in a vacuum or in light of the needs and desires of their constituents.

Market Value. Repeat after me - M A R K E T V A L U E. This is what can and should be paid for liquefying toxic balance sheets. Not a penny more. The mere fact that Mr. Paulson has been fighting against this tooth and nail has only destroyed his credibility as a bright, pragmatic thinker, a leader that can get us out of this mess. Instead, he reads as a pandering ex-Wall Street executive, a man more concerned with preserving the status quo than helping usher the financial markets into a new, more customer-focused and risk-managed phase. This is a world that can still be profitable and create value for customers, employees and shareholders alike, but perhaps at a lower level and with more stable returns. Not a bad thing. And just maybe a really good thing. But this is not what lies deep within Mr. Paulson's heart. The days of yesteryear are what he still pines for.

If Secretary Paulson can't adjust his thinking, and put transparency and clarity first, he should step down and make room for someone who can. At this point the job is less about rocket science and more about doing the right thing for those to whom much wrong has been done - the U.S. taxpayer. They are going to get us out of this and they are the ones who should benefit. Unfortunately Mr. Paulson hasn't seen it this way so far. Hopefully, he'll be able to set his ego and personal interests aside and use his substantial intellect and aptitude for good.

Comments

[AlexS:]

Hear hear. My little midwest town seems to be doing OK. Houses are being bought and sold. People have their jobs and some of the business have "help wanted" signs put out. Grocery stores are still stocked. Electricity still works. Meanwhile, the world of Wall Street and Washington D. C. is in chaos, as the pretenders to great power try to outdo each other with their stupidity and their high titles and outrageous bonuses. Go home. Go away. Leave us alone.

2008 Sep 30 11:44 AM

[Research123:]

Very well said. It is quite amazing to see the total lack of intellectual honesty employed by Paulson et al in trying to sell this plan to the American people. They either thought Americans are dumb as bricks, or thought that folks still believe that the current government leadership "knows" what the right action is and will actualy do the right thing. Wrong on both counts!

2008 Sep 30 11:58 AM

[IndyTB:]

@Roger, define transparency....Who reviews these actions, and when? Also - if this Paulson entity (or one like it) will be buying these assets at market value -- and they have already been marked to nearly zero by accounting rule, isn't that what got us here in the first place? -- then how are the target institutions helped?

2008 Sep 30 12:40 PM

[Steven Hansen:]

i will take this a step further - i do not feel comfortable with congress watching over what is going on. they do not know what they are doing, and do not have an ear to my wishes, but the lobbyist. this is happening very quickly, it is ill conceived, it is a band aid, and does nothing to prevent the continuation of the problem tomorrow.

2008 Oct 01 04:10 AM

[notsosmart:]

the new motto for our monopoly money-"TOO BIG TO FAIL<TOO MANY TO JAIL".this is all about using dumb-dumber americans to protect the greed & make it conytinue.the paulson self serving crowd will never change.

2008 Oct 01 09:41 AM

[Brahm:]

Transparency is a very relevant issue. However, after saying that our difficulties begin mounting like a tsunami landing on the coast. What do we mean by transparency? It is difficult to answer that in a coherent, relevant and encompassing manner.

To many laymen one of the greatest failures with regard to transparency in the last several years has been the way in which disclosures were made before the floating of these toxic securities which have been at the root of our problems now. There is the story how Paulson's former firm (Goldman) packaged some of the most toxic securities. The disclosure document was about 400 pages long. It disclosed everything about the packaged securities (SIV), including the toxicity of some of the parts of the package. However, someone had to have a PhD in finance and several other disciplines to understand the full possible impact, and more imprortant, weeks of time to find out what is wrong or horriblle about the package.

Whose fault was this that something like this can happen or be allowed?

Of course, Goldman first, perhaps. Why? They weren't thinking about anyone else., except themselves! Legally? Certainly, thye were not at fault at all. Those who helped peddle these to their ignorant and unsuspecting clients are seriously at fault. No doubt of it. Here the failure had been telling and outrageous.

How about the SEC, or the monitoring and permitting agency which should either require better concise disclosure or not allowed these securities to be floated since some of them were worthless or highly risky. Some were also unrelated to the more acceptable securities in the packaged SIV. Certaiinly, this or other Fed agencies connnected with the permitting of these securities were derelict. Here definitely was a problem, and from the layman's point of view, a serious on e. Agencies which were asleep or forgot their responsibilities in regard to transparency and, perhaps, even also on appropriateness. It will require a lot of legal, ethical, moral, as well as regulatory experience to browse on these failures to serve as leeson for the future. However, will we see this reviewed in a meaningful way. It is doubtful!

2008 Oct 01 10:09 AM

[helplessobs...:]

What do you guys expect from an ex GS CEO where they operate the "black box trading system" and earnings are what ever the carpet level guys say they are? For Paulson it is mission accomplished, Bear Stearns and Lehman gone, MS and MER crippled. All the marbles are in their bag, so why stop now when the U.S. Treasury will soon be their piggy bank.

2008 Oct 01 10:11 AM

[notsosmart:]

just face it.the american sheeples have been had.

2008 Oct 01 04:38 PM