Hidden in the news of the big bailout were a couple points worth considering. Given all the urgency the White House has been putting on passage of the Paulson Plan (hurry up and pass this or the world will end tomorrow), a comment from White House Deputy Press Secrety Tony Fratto yesterday is enlightening:
Fratto said it would be “unthinkable” for Congress not to pass legislation this week, asserting the result would be a “very, very serious situation” for the U.S. economy.
“It shouldn’t take much analysis to remember what happened last week, which was a very serious freeze-up in our credit markets,” Fratto said. “Our financial markets right now do not need uncertainty, they need increased certainty as to how this rescue plan is going to go forward — and that they can be sure that there is a plan to go forward — and that will begin the correction in our financial markets.”
Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough. (Link)
The prospects for the Administration getting the plan they wanted passed is almost nonexistent at this point. One would think, given the last seven years of secrecy and obfuscation by the Bush Administration, they might have considered some transparency if they were really interested in the financial health of the nation.
Yesterday during testimony, Senator Chuck Schumer asked Treasury Secretary Paulson if the $700B requested was required in one big lump sum. Paulson and Federal Reserve Chairman Ben Bernanke had previously testified that the monthly burn rate was anticipated at $50B. Schumer proposed granting the plan $150B with a review in three months to assess the effectiveness of the bailout plan. Seems eminently reasonable, right? Here's video of the exchange between Senator Schumer and Secretary Paulson:
Was it clear why Secretary Paulson shot down the Senator's proposal? Market confidence? Wouldn't it be smarter to do the job right, risking as little of taxpayers money as possible, than to make Wall Street executives feel good about the level of commitment?
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