In the classic sophomoric college film, Animal House, a naïve freshman pledge is distraught that the sleek Lincoln loaned to him by his older brother has been dinged repeatedly after a night of drunken debauchery.
The veteran fraternity brothers assure him that all he has to do is report the car stolen and they’ll get rid of the evidence.
One colleague advises him to “leave everything to me,” as he calmly fires up an acetylene torch.
I’m feeling a bit like that pledge after the House and Senate voted to ram through the sweeping bailout package that will buy up to $700 billion of troubled assets from various financial institutions.
So, in essence the government will now become a quasi-hedge fund manager, a vision that’s more than a bit disconcerting considering their track record in managing other august institutions such as the U.S. Post Office.
While there is scant pleasure to be derived from the current crisis, I have allowed myself a chuckle or two listening to various parties espouse their views on the root causes of this current debacle.
Speaker of the House, Nancy Pelosi, D-Calif., who at times appears unable to answer correctly if asked whether McDonald’s sells hamburgers, accused the current administration and President Bush in particular of squandering the budget surpluses amassed during the Clinton years.
Ms. Pelosi claimed that a lack of supervision and discipline coupled with rampant spending precipitated the current situation.
And while there’s certainly truth to the GOP spending like a drunken sailor on shore leave and doing exactly nothing to shrink the national debt, let’s go back – say a decade or so to the Clinton administration.
Regulation?
Was it not the then-president, along with his Treasury Secretary Robert Rubin, economic advisors such as Lawrence Summers, aided and abetted by Republican Sens. Phil Gramm and John McCain, who helped deregulate the banking industry by signing into law Gramm-Leach-Bliley that repealed some of the Glass-Steagall provisions?
Regulation?
How about in 2003, when the White House and then-Treasury Secretary John Snow testified about the systemic risks inherent in Fannie Mae and Freddie Mac and called for greater oversight, only to be shouted down by current House Financial Services Chairman Barney Frank, D-Mass., and New York’s own walking sound bite, Sen. Charles Schumer, each of whom declared at that time and numerous others, that that both institutions were fundamentally sound.
Curiously absent was any mention of the multi-billion-dollar accounting scandals at each.
Meanwhile, Sen. Christopher Dodd, D-Conn., maintained that the current debacle is the result of poor oversight, somehow omitting the fact that he serves as chairman of the Senate Banking Committee, which I believe has some say in oversight.
For better or worse, the taxpayer bailout is here.
Perhaps we should have let the fraternity have a crack at it.
