"Pay should be for performance, not for failure. But we need the system to work, so the reforms need to come afterward."
--Treasury Secretary Henry Merritt "Hank" Paulson Jr.
Like the early days of the Coalition Provisional Authority, it's a thieves' jamboree. Cement trucks full of cash, just back up your wheelbarrow and catch some. The difference here is that we are about to give away in one week more than the CPA gave away over the course of years. The LA Times Sunday print edition at least had the decency to use the numerical form:
Bailout tab: $700,000,000,000
Who decides who gets, who doesn't? A guy named Hank. Do you think that Hank's friends and former associates will miss out on the bonanza? Please. Can you think of any financial, insurance, investment firm that won't benefit from the River of Zeros? Please. Look at Hank's career arc: John Ehrlichman to Goldman Sachs. Hank's personal net worth is estimated by Forbes as "over $700 million." When, do you guess, was the last time he had to decide between paying the rent or filling the tank with gas?
Hence: Hank's Triage: are you a firm that made disastrously shortsighted bets on bad financial instruments? Queue up: we'll make you whole. Are you a middle-class borrower (mortgage, HELOC, credit cards) up shit creek? Go away: we need a clean bill.
Says the Daily Telegraph, "Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country over 70 times." Who do you think will be left holding the bag--bondholders in that country, or homeowners in ours? Two guesses. First one doesn't count.
And of course, there's someone backstopping Hank. Reviewing his decisions. Making sure, you know, that the seven zero zero zero comma zero zero zero comma zero zero zero comma zero zero zero of our dollars Hank gives away will be spent wisely, yes? Well, no. Here's the (aptly named) Section Eight of Hank's Proposed Plan:
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
The chutzpah of this enterprise is something we've seen many times before. What's unprecedented is its magnitude.