{"id":4799,"date":"2008-11-03T10:22:50","date_gmt":"2008-11-03T09:22:50","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=4799"},"modified":"2008-11-03T10:22:50","modified_gmt":"2008-11-03T09:22:50","slug":"is-paulson%e2%80%99s-plan-mysterious-or-non-existent","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/contributions\/is-paulson%e2%80%99s-plan-mysterious-or-non-existent\/","title":{"rendered":"Is Paulson\u2019s Plan Mysterious or Non-Existent?"},"content":{"rendered":"

By Philip Mattera<\/a>\u00a0|<\/p>\n

Those who regard Treasury Secretary Henry Paulson\u2019s bailout program as a step toward socialism should remember that such a system involves not just government ownership but also some degree of centralized economic planning. With all the twists and turns in Paulson\u2019s actions, it is difficult to determine whether he is indeed trying to guide some aspects of U.S. business but is doing so in a way we mere mortals cannot understand.<\/p>\n

Especially puzzling is Treasury\u2019s approach to deciding which banks should receive capital infusions. It was no surprise that the first $125 billion went to nine of the country\u2019s largest financial institutions, since Paulson believes that shoring up the big guys is key to restoring stability to the system. But when he then turned to regional banks for smaller injections, it was unclear why some were on the list and others were not (at least not yet).<\/p>\n

As Fortune<\/em> points out<\/a>, Paulson seems to have deliberately omitted Cleveland\u2019s National City Bank (which is now being sold to PNC) because of its precarious portfolio of bad home loans, but he included similarly situated ones such as Milwaukee\u2019s Marshall & Isley. Now that Paulson, under pressure, is reportedly<\/a> planning to extend the capital program to privately held banks, whose finances are less transparent, it will be more difficult to figure out if there is rhyme or reason to Treasury\u2019s picks.<\/p>\n

Paulson was so lackadaisical in structuring the bailout that the banks getting the federal investments did not hesitate to signal that they would use the funds not to make loans<\/a> but rather to finance acquisitions and continue paying\u00a0out\u00a0dividends<\/a>\u00a0and probably big executive bonuses. Presumably responding to criticism from other quarters, ranging from members of Congress to the United Steelworkers<\/a>, some banks are promising<\/a> that they will take steps to ease the credit crunch. Yet it is unlikely these limited gestures will be enough to shore up a financial system that grows weaker by the day.<\/p>\n

So, are things going according to Paulson\u2019s plan\u2013or is there no real plan but simply an ad hoc set of measures that desperately seek to prevent a collapse? Paulson seems to want it both ways. He is willing to push through an unprecedented partial nationalization of banks but is unwilling to use that investment to pressure banks to put the public interest before their selfish objectives (which now means lending as little as possible in a enervated economy). We end up with a bizarre form of socialism in which firms get government investment but continue doing what they damn well please.<\/p>\n

While Paulson would like to be seen as the mastermind of a brilliant rescue plan, he may be, like the individual Dorothy and her friends discover is frantically manipulating a bunch of levers behind a curtain in Oz, just not a very good wizard.<\/p>\n

Note: Since Treasury has been slow to announce all the banks receiving capital infusions, the investigative website ProPublica is filling the void with its own running\u00a0list<\/a> compiled with information from other sources.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Philip Mattera\u00a0| Those who regard Treasury Secretary Henry Paulson\u2019s bailout program as a step toward socialism should remember that such a system involves not just government ownership but also some degree of centralized economic planning. With all the twists and turns in Paulson\u2019s actions, it is difficult to determine whether he is indeed trying […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,1616],"tags":[49],"class_list":{"0":"post-4799","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-contributions","7":"category-usa-news","8":"tag-usa-news"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/4799","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=4799"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/4799\/revisions"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=4799"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=4799"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=4799"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}