Traders in Panic on Wall Street

by Charley James

Here we go again. 

As the Bush administration did with the Patriot Act and Iraq War resolution, Henry Paulson and Ben Bernanke spent today trying to hustle Congress into new territory using the familiar administration tactic of hysteria. Fortunately, this time it looks as if more than a few members have read the fine print before committing us to a whole new level of disaster. 

The meltdown is a prime example of what happens when the nation’s leaders on both ends of Pennsylvania Avenue, on Wall Street and Main Street, hold government service in contempt. And who believe, amazingly, that “the market” is an alternate life form requiring no supervision or oversight. 

Paulson spent a good part of the day telling Senator Dodd’s banking committee not to fret, not to worry, not to upset “marketplace forces.” Just show him the money today and tomorrow he’ll talk with Congress about nettlesome issues such as oversight, executive compensation, public ownership of bailed out institutions and so on. Watching Paulson reminds me of Wimpy, a 1930s-era cartoon character who kept telling waiters, “I’ll gladly pay you tomorrow for a hamburger today.” Except Wimpy never came back to pay.

According to the New York Times, Democratic Senator Sherrod Brown of Ohio asked the former professor-turned-Fed chief, “Do you think Wall Street owes the American people an apology?” 

Bernanke quibbled over word choice, ruminating that “Wall Street is an abstraction. There were many people who made mistakes, many regulators who made mistakes.” In other words, everyone was responsible so no one is responsible. That’s how the old Supreme Soviet did things as a hedge against anyone being tossed in the Lubyanka. Paulson dashed to Bernanke’s rescue, turning populist and saying, “I share the outrage … There’s a lot of blame to go around.” 

If any apologies are owed, apparently we’ll get them later but we’re not sure from who or when we’d get them – if at all.

Meanwhile, Bernanke and Paulson clearly lost sight of the fact that Wall St. as the “market’ is simply human nature writ large, with all the greed and malign intent of the worst of all evil empires. Without regulation and oversight, anarchy ensues and it is always the little guy who pays the price. 

Isn’t it funny that the same people who fight against “socialized medicine” wholeheartedly support socialized banking?

Well, they’ve got theirs so who else matters?

Yet there is a ray of sunlight shining through the thunderheads. Like every other proposed condition on the bailout money, Paulson and Bernanke spent much of the day trying to convince Senators to set aside punitive measures for executives until after the bailout. But Sen. Dodd drew a line in the sand. Any bailout would “include executive compensation,” he said. “Count on it.”

And so it goes, as the great Linda Ellerby would say as her sign-off line. And so it goes.